저자: ParkevTatevosian,CFA · 외국인
요약 보기
브로드컴은 AI 인프라 매출이 6.6억 달러로 25% 성장하며 강세. 비AI 반도체 매출은 약 40억 달러로 정체. 3분기 매출 약 158억 달러(+21%), 영업이익률 66% 이상 전망. 디자인 전문 팩리스 모델로 높은 마진과 FCF(64억 달러, 매출의 43%) 창출. 선행 PER 35배로 역사적 고점권이라 기존 매수 추천을 보유로 하향. DCF 적정가 주당 160달러 vs 현재가 253달러. VMware 인수 통합으로 소프트웨어 마진 개선.
다듬은 글
Broadcom's management team held a conference call with Wall Street analyst and revealed critical information that's important for Broadcom investors to know. Now, this is important whether you're a Broadcom shareholder or whether you're thinking about buying Broadcom stock, but you don't know yet if it's a good price to buy or if you should wait and you're on the fence about the stock.
So whether you own it or you're thinking about buying it, this video will be important for you as I'll share critical details about the company that Brockcom investors should know about. ne of the things that came out of the company's quarterly earnings results and the conference call is that anything non AI related is not doing so well.
And the company said that they're forecasting nonAI semiconductor revenue to stay at around $4 billion. But the good news for Broadcom is that everything related to artificial intelligence is absolutely booming and that's the bigger part of its business is the part of the business that's serving the AI market and that part of the business is soaring.
Infrastructure revenue specifically of 6.6 6 billion was up 25% year-over-year. That was over their outlook of 6.5 billion. For the third quarter, the company expects infrastructure software revenue to be approximately 6.7 billion, which would be up 16% year-over-year. Overall, they're guiding third quarter consolidated revenue to be approximately 15.8 8 billion, which would be up 21% year-over-year.
And that would be an acceleration from the 20% revenue the company reported in the second quarter. And they're forecasting third quarter adjusted EBIT to be at least 66% of revenue, highlighting the high profit margins Broadcom operates with. And part of the reason they operate with such high profit margins is because they are a designon company.
They don't do the manufacturing. They outsource that to other companies. And it's a similar business model to Nvidia. And Nvidia generates very high profit margins as well. And investors like this business model. Investors don't like companies that try to do the designing and the manufacturing of semiconductors.
uh those are companies like Intel and Micron which haven't been fan favorites of investors in recent years because of the large capital expenditure that's required to participate in the semiconductor manufacturing industry and if you're not specializing and only manufacturing and manufacturing at large scale it's very difficult to compete with companies like Taiwan Semiconductor and Samsung that are manufacturing these semiconductors at very large scale.
Second quarter operating income came in at 9.8 billion which was up 37% from a year ago with operating margins at 65% of revenue. Very strong operating profit margins as I highlighted earlier and investors have liked that and in fact when I go to fintad.io I owe to get can see is trading at a forward PE of 35.
This is near the most expensive this stock has traded for going back several several years. So Broadcom stock investors are very enthusiastic and they've bid up the share price of this company. And you know, I had Broadcom stock rated as a buy a few months ago and then following the company's earnings release, following this earnings release that I'm going over here, I downgraded the stock to a hold because of the valuation.
I said, you know what, for the previous few months, it's been a good time to buy Broadcom stock, and now it's a good time to hold it and let your share share gains appreciate and wait for a better opportunity if you're looking to buy more. But if you already own it, it's still reasonable to hold this stock for several years and let the shareholder wealth accumulate.
So two parts of Broadcom's business. The infrastructure software, that part of the business generates much higher profit margins than the other side of the business. The infrastructure software side generates operating margins of roughly 76%. that compares to operating margins of roughly 60% in this segment in the same time last year.
The reason for the improvement is their disciplined integration of VMware. Remember a year ago when I was covering the company and I highlighted that management was confident that the acquisition of VMware would be positive to the company's profits and profit margins. And here we are fast forward as the company is now being integrated.
the margins are rising just like management said. And at the time when they made the acquisition, I talked about how Broadcom has been one of those businesses, those rare businesses that makes acquisitions prudently and pays a reasonable price and buys companies that integrate well into their overall corporation.
And they've got skill in this. They've done this several times now, major acquisitions over the years, and they're good at making acquisitions, which is a skill that not very many corporations can boast. Free cash flow in the quarter came in at 6.4 billion and that was 43% of revenue. Again, highlighting how lucrative that uh designonly business model is.
Outsourcing manufacturing allows the company to generate very high free cash flow because they don't have to reinvest the cash flow into capital expenditures which weighs down a company's free cash flow. And in fact, those capital expenditures are the primary reasons why companies like Intel had generated such low or even negative free cash flow in several quarters going back these previous few years.
They also updated us on their balance sheet and they ended the second quarter with $9.5 billion in cash and 69.4 billion in gross principal debt. So they paid down some of that bet some of that debt and they actually only have 67.8 billion in debt right now. Some of that debt they accumulated to make the acquisition of VMware.
But I know the number looks very large, but if you look at the weighted average coupon rate and the weighted average interest rate that they have to pay for this debt, it's a bargain for the company to be able to raise capital at such low interest rates. So the average coupon rate is 3.8%. And the maturity is 7 years.
The weighted average interest rate and years to maturity of their $8 billion in floating rate debt is 5.3% and 2.6 years respectfully. The difference between fixed rate debt and floating rate debt is the fixed rate debt the interest rate stays the same throughout the entire length of the bond. Whereas floating rate debt changes based on changes in interest rates uh probably changes to the LIBORE interest rate but also connected to interest rates of the e worldwide economy and if interest rates increase then Broadcom's interest expense will increase and if interest rates decrease then Broadcom's interest rate on this floating rate debt will decrease and it's only a small fraction of its overall debt.
That's floating rate, which makes the debt less risky. When you have floating rate debt, it's riskier because you don't know what your interest expense will be next year. Sure, interest rates are not that volatile and they don't go up and down by all that much. But still, as a corporation, if all of your $60 billion in debt was in floating rate debt, you expose yourself to the small chance that interest rates might explode and go up to 15%.
And eat up a large part of that free cash flow your corporation generates. So, I think having a small portion of your interest expense be floating rate is reasonable. And I think this percentage, this proportion is very reasonable for Broadcom stock investors. So according to of Broadcom is $160. The current market price is $253, which again points to one of the reasons why I downgraded Broadcom stock from a buy to a hold because I felt the valuation was getting stretched.
By the way, if you want detailed calculations and breakdowns of discounted cash flow valuations on dozens of videos, you can join my channel as a member. Less than $5 a month, you get access to all those videos. So, overall, Broadcom has excellent prospects. Arguably, the business has never been in a better position to capitalize on booming demand for artificial intelligence and the company's position in the scale it's operating in, the recent acquisition, giving it more opportunities to cross-ell and find synergies and lowering cost and increasing profit margins.
It's a great business in a great position and that's reflected in the valuation. So, it's no secret that Broadcom is a great business right now with great prospects and investors have jumped in to capitalize on it. If you bought the stock a few months ago based on my recommendation, congratulations.
You bought it at great prices. Now, you can hold and wait for several years as the company capitalizes on this boom from artificial intelligence experiences revenue growth, profit expansion, and free cash flow expansion over the next few years. that's arguably going to be larger than in any point in the previous decade. . Thank you again.
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