Broadcom (AVGO) Stock: Headed Up On Earnings Beat


Broadcom AVGO Stock NewsBroadcom Inc (NASDAQ: AVGO) is having an incredibly strong start to the trading session this morning, and for good reason. The company reported its earnings for the third fiscal quarter of 2018, beating expectations and setting the stage for strong growth ahead. Today, we’ll talk about:

  • The financial results;
  • what we’re seeing from AVGO stock as a result; and
  • what we’ll be watching for ahead.

AVGO Announces Earnings

As mentioned above, Broadcom is having an incredibly strong start to the trading session in the pre-market hours this morning after the company reported its earnings for the third fiscal quarter. Here’s what we saw from the report:

  • Revenue – In terms of revenue AVGO beat estimates, but not by much. During the quarter, the company said that it earned revenue in the amount of $5.063 billion. That figure showed an annual growth rate of 13% and beat analyst expectations of $5.06 billion.
  • Earnings – Earnings proved to be a big hit. During the quarter, analysts expected that the company would generate earnings in the amount of $4.83 per share. However, the company reported earnings for the quarter in the amount of $4.98 per share, once again beating estimates.
  •  Guidance – Finally, guidance proved to be a hit as well. AVGO said that it is expecting for the current quarter revenue to come in at $5.4 billion, plus or minus $75 million. This figure came in slightly above analyst expectations of $5.37 billion.

In a statement, Hock Tan, President and CEO at Broadcom, had the following to offer:

Datacenter demand is driving strong growth in more than 50 percent of our consolidated revenue… Through the strength of our franchise business model, we delivered another quarter of sustained revenues and strong free cash flows.

The above statement was followed up by Tom Krause, CFO at AVGO. Here’s what he had to offer:

During the quarter, we repurchased 24 million shares, returning approximately $5.38 billion to our stockholders… Consistent with our stated capital allocation plan, we intend to return to stockholders 50 percent of the prior fiscal year free cash flow in the form of cash dividends. With the balance of our free cash flow, we have the financial flexibility to fund a combination of share repurchases and future acquisitions to expand earnings capacity.

What We’re Seeing From The Stock 

As investors, one of the first lessons that we learn is that the news moves the market. In the case of Broadcom, the news proved to be overwhelmingly positive. So, it comes as no surprise that excited investors are sending the stock screaming for the top. Of course, our partners at Trade Ideas were the first to alert us to the gains. Currently (9:12), AVGO is trading at $223.00 per share after a gain of $7.03 or 3.26% thus far today.

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What We’ll Be Watching For Ahead

Moving forward, the CNA Finance team will continue to keep a close eye on AVGO. In particular, we’re interested in following the story surrounding the company’s continued work toward growth. We also view the stock as highly undervalued with an valuation at under 11 times consensus EPS for the year. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!

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