Broadcom Inc. (AVGO) Stock Analysis
Broadcom Inc. (AVGO) Stock Analysis
Analysis from 10-K filed 2025-12-18. Data as of Q1 2026.
Overall Grade: F (Concerning)
Broadcom Inc. faces challenges in financial performance that warrant careful analysis.
| Metric | Value | Context |
|---|---|---|
| ROIC | 19.1% | Solid returns |
| FCF Margin | 42.3% | Strong cash generation |
Investment Thesis: Strong return on invested capital of 19.1% suggests durable competitive advantages and efficient capital allocation.
Explore Broadcom Inc.: Earnings History | Filing Intelligence | ROIC Analysis
Profitability: Broadcom Inc. earns 19.1% ROIC, Top 25% in Technology
Broadcom Inc.'s trailing-twelve-month ROIC of 19.1% ranks Top 25% in Technology companies (sector median: 5.0%), driven by NOPAT margin of 40.0% combined with asset turnover of 0.4x. Source: 10-K filed 2025-12-18. Gross margin of 67.8% with operating margin at 40.7% reflects strong pricing power.
| Metric | AVGO | Rating | Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 19.1% | Good | Above sector median of 5.0% |
| Gross Margin | 67.8% | Excellent | Strong pricing power |
| Operating Margin | 40.7% | Excellent | Efficient operations |
Cash Flow: Broadcom Inc. generates $28.9B FCF at 42.3% margin, positive NaN/8 quarters
Broadcom Inc. generated $28.9B in free cash flow (TTM), a 42.3% FCF margin, a margin that ranks Top 5% in Technology. Operating cash flow exceeds net income by 1.2x, indicating high earnings quality. FCF was positive in N/A of the last 8 quarters. Source: 10-K filed 2025-12-18.
| Metric | AVGO | Rating | Context |
|---|---|---|---|
| Free Cash Flow Margin | 42.3% | Excellent | Excellent cash conversion |
| Free Cash Flow (TTM) | $28.9B | Good | Positive cash generation |
| OCF/Net Income | 1.2x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
Balance Sheet Analysis for Broadcom Inc.
Total debt of $66.1B offset by $14.2B in cash. Source: 10-K filed 2025-12-18.
| Metric | AVGO | Rating | Context |
|---|---|---|---|
| Net Cash Position | $-51.9B | Warning | Net debt position |
Valuation: Broadcom Inc. trades at 62.6x earnings
Broadcom Inc. trades at a P/E of 62.6x. Free cash flow yield of 1.8% reflects market expectations for growth.
| Metric | AVGO | Rating | Context |
|---|---|---|---|
| P/E Ratio | 62.6x | Warning | Premium valuation |
| EV/Sales | 23.7x | Warning | Growth premium priced in |
| FCF Yield | 1.8% | Warning | Lower cash yield |
| Dividend Yield | 0.7% | Adequate | Growth focus over income |
Capital Allocation: Broadcom Inc. returns 1.4% shareholder yield
Broadcom Inc.'s total shareholder yield is 1.4% (dividends 0.7% + buybacks 0.7%). Source: 10-K filed 2025-12-18.
| Metric | AVGO | Rating | Context |
|---|---|---|---|
| Total Shareholder Yield | 1.4% | Adequate | Dividend + buyback yield combined |
| Buyback Yield | 0.7% | Adequate | Minimal buyback activity |
| Total Capital Returned (TTM) | $21.8B | Good | Dividends + buybacks returned to shareholders |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 19.1% | Top 25% | 3.8x above |
| Free Cash Flow Margin | 42.3% | Top 5% | 4.7x above |
| Gross Margin | 67.8% | Top 50% | 1.3x above |
| Operating Margin | 40.7% | Top 5% | 8.5x above |
| P/E Ratio | 62.6x | N/A | - |
Financial Scorecard
| Metric | AVGO | Rating | Sector Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 19.1% | Good | Top 25% of sector (median: 5.0%) |
| Free Cash Flow Margin | 42.3% | Excellent | Top 5% of sector (median: 9.0%) |
| Gross Margin | 67.8% | Excellent | Top 50% of sector (median: 51.1%) |
| P/E Ratio (Price-to-Earnings) | 62.6x | Warning | High expectations priced in |
| Free Cash Flow Yield | 1.8% | Warning | Growth-focused valuation |
Frequently Asked Questions
Q: What is Broadcom Inc.'s Return on Invested Capital (ROIC)?
Broadcom Inc. (AVGO) has a trailing twelve-month Return on Invested Capital (ROIC) of 19.1%. This compares above the sector median of 5.0%. An ROIC between 12-20% indicates solid capital allocation and sustainable competitive position.
Q: What is Broadcom Inc.'s Free Cash Flow Margin?
Broadcom Inc. (AVGO) has a free cash flow margin of 42.3%, generating $28.9 billion in free cash flow over the trailing twelve months. A FCF margin above 20% indicates excellent cash conversion and a high-quality business model.
Q: Is Broadcom Inc. stock overvalued or undervalued?
Broadcom Inc. (AVGO) trades at a P/E ratio of 62.6x, which is above the sector median of N/A. The EV/Sales multiple is 23.7x. Free cash flow yield is 1.8%, reflecting growth expectations priced into the stock.
Q: Does Broadcom Inc. pay a dividend?
Broadcom Inc. (AVGO) currently pays a dividend yield of 0.7%. Including share buybacks, the total shareholder yield is 1.4%. The relatively low yield suggests the company prioritizes growth reinvestment over income distribution.
Q: What is Broadcom Inc.'s revenue and earnings growth?
Broadcom Inc. (AVGO) grew revenue by 25.2% year-over-year. Earnings per share increased by 146.6% compared to the prior year. Double-digit revenue growth indicates strong demand and market share gains.
Q: Is Broadcom Inc. buying back stock?
Broadcom Inc. (AVGO) repurchased $10.3 billion of stock over the trailing twelve months. This represents a buyback yield of 0.7%.
Q: How does Broadcom Inc. compare to competitors in Technology?
Compared to other companies in Technology, Broadcom Inc. (AVGO) shows: ROIC of 19.1% is above the sector median of 5.0% (Top 19%). FCF margin of 42.3% exceeds the sector median of 9.0% (Top 0% of sector). Gross margin at 67.8% is 16.7 percentage points higher than sector peers. These rankings are based on MetricDuck's analysis of all Technology companies with available SEC filings.
Q: What warning signs should I watch for with Broadcom Inc.?
Broadcom Inc. (AVGO) shows no major financial warning signs based on current metrics. However, investors should always monitor: 1) Margin compression trends, 2) Cash flow consistency, 3) Debt levels relative to cash generation, and 4) Changes in competitive positioning.
Data Source: Data sourced from 10-K filed 2025-12-18. TTM metrics as of Q1 2026.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
Scope: This analysis covers SEC filing fundamentals — profitability, cash flow, balance sheet, and valuation metrics. For analyst estimates and price targets, consult sell-side research.
This analysis is for informational purposes only and does not constitute investment advice.