Balance sheet analysis
Broadcom’s total assets were $72.86 billion and $73.25 billion as of October 29, 2023 and October 30, 2022, respectively.
The company had goodwill of $43.65 billion and total current assets of $20.85 billion as of October 29, 2023.
Total current liabilities were $7.4 billion as of October 29, 2023.
The current ratio was 2.8 times for fiscal 2023.
Total liabilities were $48.9 billion as of October 29, 2023.
The debt ratio was 67% for fiscal 2023.
Goodwill was removed from the amount of total assets, and the debt ratio was 167%.
Net cash provided by operating activities was $18 billion, $16.7 billion and $13.76 billion in fiscal 2023, 2022 and 2021, respectively.
Given that Broadcom’s cash flow was very strong, the balance sheet was very healthy.
Profitability analysis
Total net revenue was $35.8 billion, $33.2 billion and $27.5 billion for fiscal 2023, 2022 and 2021, respectively.
Total net revenue in fiscal 2023 was up 7.8% year-on-year.
Total net revenue in fiscal 2022 was up 20.7% year-on-year.
Net income was $14 billion, $11.5 billion and $6.7 billion in fiscal 2023, 2022 and 2021, respectively.
Total stockholders’ equity was $24 billion as of October 29, 2023.
The return on equity was 58% for fiscal 2023.
The return on total asset was 19.2% for fiscal 2023.
Broadcom’s profitability was very good with strong cash flow.
Cash flow analysis
Net cash provided by operating activities was $18 billion, $16.7 billion and $13.76 billion in fiscal 2023, 2022 and 2021, respectively.
Good news is that the company’s expenditure capital was minimal.
Payments of dividends was $7.6 billion, $7 billion and $6.2 billion in fiscal 2023, 2022 and 2021, respectively.
Repurchases of common stock were $5.8 billion and $7 billion in fiscal 2023 and 2022, respectively.
Broadcom’s cash returns to shareholders was generous.
Broadcom’s operating results for the quarter ending February 4, 2024.
Broadcom’s financial condition changed significantly, because the company completed the acquisition of VMware, Inc. , for approximately $30.8 billion in cash and 54.4 million shares of Broadcom common stock with a fair value of $53.4 billion.
Total asset were $177.9 billion and $72.9 billion as of January 4, 2024 and October 29, 2023, respectively.
The increase in goodwill was $53.9 billion or 123% to $97.6 billion at January 4, 2024, compared to $43.7 billion at October 29, 2023.
Intangible assets, net were $47.2 billion and $3.87 billion as of January 4, 2024 and October 29, 2023.
The amount of goodwill and intangible assets accounted for 81.4% of total assets.
The company’s total liabilities were $107.6 billion and $48.9 billion as of January 4, 2024 and October 29, 2023, respectively.
The amount of goodwill and intangible assets subtracted from total assets, the debt ratio was 325% at January 4, 2024.
We reckon that Broadcom ‘s free cash flow hit about $20 billion a year, which can support great debt.
Broadcom’s total net revenue was $11.96 billion and $8.9 billion as of January 4, 2024 and January 29, 2023, respectively.
The increase of total net revenues as of January 4, 2024 came from completing the acquisition of VMware.
Net income was $1.3 billion and $3.77 billion as of January 4, 2024 and January 29, 2023, respectively.
Net cash provided by operating activities was $4.8 billion and $4 billion as of January 4, 2024 and January 29, 2023, respectively.
Broadcom acquired VMware for approximately $30.8 billion in cash and 54.4 million shares of Broadcom common stock with a fair value of $53.4 billion, which is acceptable for shareholders.
Why is it acceptable for shareholders ?
We think Broadcom stock price is overvalued by about 50%, so 54.4 million shares of Broadcom common stock is equivalent to about $27 billion in cash.
From our perspectives, Broadcom acquired VMware for about $60 billion in cash.
VMware’s net cash from operations was $4.3 billion in fiscal 2023, and the $60 billion in cash is acceptable.
The cost of the $30.8 billion in cash is about 5%, which is equivalent to $1.5 billion. The amount ($4.3 billion)of VMware’s net cash from operations more than the $1.5 billion of capital cost.
VMware’s operating results
VMware’s total revenue was $13.35 billion, $12.85 billion and $11.77 billion for the year ended February 3, 2023, the year ended January 28, 2022 and the year ended January 29, 2021, respectively.
Net income was $1.3 billion, $1.82 billion and $2 billion for fiscal 2023, 2022 and 2021, respectively.
Net cash provided by operating activities was $4.3 billion, $4.36 billion and $4.4 billion in fiscal 2023, 2022 and 2021, respectively.
Total revenue was $6.68 billion and $6.4 billion for the six months ended August 4, 2023 and the six months ended July 29, 2022, respectively.
Net cash provided by operating activities was $2.2 billion and $1.4 billion for the six months ended August 4, 2023 and the six months ended July 29, 2022, respectively.
Conclusion
Broadcom stock price is $1395.29 per share, which is equivalent to $646.61 billion in market capitalization.
We think that Broadcom’s reasonable valuation is about $300 billion.
Disclaimer: The content is for reference only and does not constitute investment advice.
