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Broadcom (AVGO) Earnings & Revenues Beat Estimates in Q3

Zacks Equity Research


Balance Sheet & Cash Flow

As of Aug 4, 2019, cash & cash equivalents were $5.462 billion, up from $5.328 billion reported at the end of the previous quarter. Long-term debt (including current portion) was $37.565 billion at the end of the fiscal third quarter compared with $37.548 billion in the prior quarter.

Broadcom generated cash flow from operations of roughly $2.419 billion compared with $2.667 billion in the previous quarter. Capital expenditure totaled $112 million, down from the last reported quarter’s $125 million. Free cash flow during the quarter was $2.307 billion, down from $2.542 billion reported in fiscal second quarter.

During the reported quarter, the company repurchased approximately 2.6 million shares for $736 million. Additionally, Broadcom returned $1.057 billion in form of dividends to shareholders during the fiscal third quarter.

The company declared a quarterly dividend of $2.65 per share, payable on Oct 1, 2019, to shareholders as on Sep 23, 2019.

Guidance

Semiconductor solutions and infrastructure software are expected to contribute $17.5 billion and $5 billion, respectively, to total revenues.

Management notes stability in demand for mainframe and enterprise software across Western Europe and North America. Demand for SAN switching is anticipated to be down, even as OEMs work down on inventories.

Uncertainty concerning U.S. China trade war is compelling management to stay cautious. Nonetheless, the company anticipates seasonal demand for smartphone parts from “large North American OEM customer” likely referring to Apple AAPL. Notably, Apple’s iPhone 11 is scheduled to go on sale on Sep 20.

Non-GAAP operating margin is now anticipated to be 52.5% (previously 51%).

The company continues to project capital expenditure of $550 million for fiscal 2019.

Zacks Rank & Stock to Consider

Currently, Broadcom carries a Zacks Rank #4 (Sell).

A better-ranked stock in the broader technology sector is Perficient PRFT, flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Perficient is currently pegged at 10.75%.

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Broadcom Inc. Price, Consensus and EPS Surprise

Click to get this free report Apple Inc. (AAPL) : Free Stock Analysis Report Perficient, Inc. (PRFT) : Free Stock Analysis Report Symantec Corporation (SYMC) : Free Stock Analysis Report Broadcom Inc. (AVGO) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research