Broadcom Inc (Nasdaq: AVGO) has experienced strong performance over the past year, but the stock is now considered expensive and less attractive due to a decrease in dividend yield. Recent operating performance shows growth in revenue, but it lags behind other technology companies like NVIDIA. Despite AI tailwinds, Broadcom’s revenue growth was boosted by the VMWare acquisition rather than organic business growth. The company has historically returned cash to investors through buybacks and dividends, but its share count has increased, diluting earnings per share growth. Broadcom’s current valuation is high relative to historical norms, with an enterprise value to EBITDA ratio 35% above the 5-year median. Analysts anticipate modest earnings per share growth for the upcoming quarterly results, but Broadcom has a history of beating expectations. However, the company’s growth rate may not justify its current valuation, making it less attractive for investors. It may be a “hold” for some, but others may consider selling shares to lock in gains. Overall, the recommendation is to wait for a potential price drop to make Broadcom a more attractive investment.
Article Source
https://seekingalpha.com/article/4697432-broadcom-too-expensive
