Broadcom Inc. (NASDAQ:AVGO) was analyzed using a DCF model by GuruFocus to determine its intrinsic value. The model takes into account EPS without NRI and a discount rate of 11%. The intrinsic value was calculated to be $1360.94, while the current trading price is $1703.31, indicating that the company is fairly valued with a margin of safety of -25.16%. The model consists of a growth stage and a terminal stage, with assumptions such as a growth rate of 0.00% for the growth stage and 4% for the terminal stage.
The article also discusses the discounted free cash flow model, which calculates the intrinsic value based on free cash flow per share. In this case, the intrinsic value was found to be $1285.72, suggesting that Broadcom Inc. may be slightly overvalued with a margin of safety of -32.48%.
It is important to note that the DCF model is based on assumptions and projections, which can impact the accuracy of the intrinsic value calculation. Factors such as future earnings potential, growth, predictability, and discount rate must be considered when using this valuation methodology. GuruFocus provides tools like the All-in-one analyzer to help investors identify undervalued companies that have a high predictability factor.
Overall, the article serves as a general overview of Broadcom Inc.’s valuation using the DCF model and provides insights into the factors to consider when analyzing a company’s intrinsic value.
Article Source
https://finance.yahoo.com/news/unlocking-intrinsic-value-analysis-broadcom-120031178.html