Intrinsic value of Broadcom - AVGO

Previous Close

$232.95

  Intrinsic Value

$750.61

stock screener

  Rating & Target

str. buy

+222%

Previous close

$232.95

 
Intrinsic value

$750.61

 
Up/down potential

+222%

 
Rating

str. buy

We calculate the intrinsic value of AVGO stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 95.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  19.70
  18.23
  16.91
  15.72
  14.64
  13.68
  12.81
  12.03
  11.33
  10.70
  10.13
  9.61
  9.15
  8.74
  8.36
  8.03
  7.72
  7.45
  7.21
  6.99
  6.79
  6.61
  6.45
  6.30
  6.17
  6.06
  5.95
  5.85
  5.77
  5.69
Revenue, $m
  21,110
  24,959
  29,178
  33,764
  38,709
  44,004
  49,642
  55,615
  61,915
  68,537
  75,476
  82,732
  90,303
  98,193
  106,404
  114,945
  123,823
  133,050
  142,638
  152,602
  162,960
  173,729
  184,930
  196,586
  208,720
  221,359
  234,530
  248,261
  262,584
  277,531
Variable operating expenses, $m
  7,005
  7,634
  8,324
  9,074
  9,882
  10,748
  11,670
  12,646
  13,676
  14,759
  12,340
  13,526
  14,764
  16,054
  17,396
  18,793
  20,244
  21,753
  23,320
  24,949
  26,643
  28,403
  30,235
  32,140
  34,124
  36,190
  38,344
  40,589
  42,930
  45,374
Fixed operating expenses, $m
  9,210
  9,413
  9,620
  9,832
  10,048
  10,269
  10,495
  10,726
  10,962
  11,203
  11,449
  11,701
  11,959
  12,222
  12,491
  12,765
  13,046
  13,333
  13,627
  13,926
  14,233
  14,546
  14,866
  15,193
  15,527
  15,869
  16,218
  16,575
  16,939
  17,312
Total operating expenses, $m
  16,215
  17,047
  17,944
  18,906
  19,930
  21,017
  22,165
  23,372
  24,638
  25,962
  23,789
  25,227
  26,723
  28,276
  29,887
  31,558
  33,290
  35,086
  36,947
  38,875
  40,876
  42,949
  45,101
  47,333
  49,651
  52,059
  54,562
  57,164
  59,869
  62,686
Operating income, $m
  4,895
  7,911
  11,234
  14,859
  18,779
  22,987
  27,477
  32,243
  37,277
  42,575
  51,687
  57,505
  63,581
  69,917
  76,517
  83,387
  90,533
  97,964
  105,691
  113,727
  122,084
  130,780
  139,830
  149,253
  159,069
  169,300
  179,968
  191,097
  202,714
  214,845
EBITDA, $m
  11,461
  15,027
  18,952
  23,231
  27,856
  32,821
  38,116
  43,733
  49,666
  55,909
  62,458
  69,311
  76,467
  83,930
  91,702
  99,790
  108,203
  116,951
  126,047
  135,504
  145,340
  155,572
  166,220
  177,307
  188,855
  200,889
  213,437
  226,526
  240,186
  254,450
Interest expense (income), $m
  310
  948
  1,308
  1,709
  2,148
  2,625
  3,140
  3,691
  4,278
  4,900
  5,556
  6,245
  6,967
  7,723
  8,511
  9,332
  10,187
  11,076
  12,000
  12,960
  13,958
  14,996
  16,074
  17,195
  18,361
  19,574
  20,837
  22,153
  23,524
  24,953
  26,444
Earnings before tax, $m
  3,947
  6,603
  9,526
  12,711
  16,153
  19,847
  23,786
  27,964
  32,377
  37,019
  45,442
  50,537
  55,858
  61,406
  67,186
  73,200
  79,457
  85,964
  92,731
  99,768
  107,089
  114,706
  122,635
  130,892
  139,495
  148,463
  157,815
  167,574
  177,761
  188,401
Tax expense, $m
  1,066
  1,783
  2,572
  3,432
  4,361
  5,359
  6,422
  7,550
  8,742
  9,995
  12,269
  13,645
  15,082
  16,580
  18,140
  19,764
  21,453
  23,210
  25,037
  26,937
  28,914
  30,971
  33,111
  35,341
  37,664
  40,085
  42,610
  45,245
  47,996
  50,868
Net income, $m
  2,882
  4,820
  6,954
  9,279
  11,792
  14,488
  17,364
  20,414
  23,635
  27,024
  33,173
  36,892
  40,776
  44,827
  49,045
  53,436
  58,004
  62,754
  67,694
  72,831
  78,175
  83,735
  89,524
  95,551
  101,832
  108,378
  115,205
  122,329
  129,766
  137,533

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  54,549
  64,493
  75,397
  87,246
  100,023
  113,706
  128,275
  143,707
  159,986
  177,097
  195,029
  213,777
  233,341
  253,727
  274,946
  297,015
  319,956
  343,798
  368,574
  394,321
  421,085
  448,912
  477,856
  507,974
  539,329
  571,988
  606,020
  641,501
  678,511
  717,134
Adjusted assets (=assets-cash), $m
  54,549
  64,493
  75,397
  87,246
  100,023
  113,706
  128,275
  143,707
  159,986
  177,097
  195,029
  213,777
  233,341
  253,727
  274,946
  297,015
  319,956
  343,798
  368,574
  394,321
  421,085
  448,912
  477,856
  507,974
  539,329
  571,988
  606,020
  641,501
  678,511
  717,134
Revenue / Adjusted assets
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
Average production assets, $m
  25,607
  30,275
  35,393
  40,956
  46,954
  53,377
  60,216
  67,461
  75,103
  83,135
  91,553
  100,354
  109,538
  119,108
  129,068
  139,428
  150,197
  161,390
  173,020
  185,107
  197,670
  210,733
  224,320
  238,459
  253,178
  268,509
  284,484
  301,140
  318,514
  336,645
Working capital, $m
  2,639
  3,120
  3,647
  4,221
  4,839
  5,501
  6,205
  6,952
  7,739
  8,567
  9,435
  10,341
  11,288
  12,274
  13,301
  14,368
  15,478
  16,631
  17,830
  19,075
  20,370
  21,716
  23,116
  24,573
  26,090
  27,670
  29,316
  31,033
  32,823
  34,691
Total debt, $m
  24,225
  31,644
  39,778
  48,618
  58,149
  68,357
  79,225
  90,738
  102,882
  115,646
  129,024
  143,010
  157,605
  172,813
  188,642
  205,105
  222,220
  240,005
  258,488
  277,696
  297,661
  318,420
  340,012
  362,481
  385,872
  410,235
  435,623
  462,092
  489,701
  518,514
Total liabilities, $m
  40,693
  48,112
  56,246
  65,086
  74,617
  84,825
  95,693
  107,206
  119,350
  132,114
  145,492
  159,478
  174,073
  189,281
  205,110
  221,573
  238,688
  256,473
  274,956
  294,164
  314,129
  334,888
  356,480
  378,949
  402,340
  426,703
  452,091
  478,560
  506,169
  534,982
Total equity, $m
  13,855
  16,381
  19,151
  22,161
  25,406
  28,881
  32,582
  36,502
  40,637
  44,983
  49,537
  54,299
  59,269
  64,447
  69,836
  75,442
  81,269
  87,325
  93,618
  100,158
  106,955
  114,024
  121,375
  129,025
  136,990
  145,285
  153,929
  162,941
  172,342
  182,152
Total liabilities and equity, $m
  54,548
  64,493
  75,397
  87,247
  100,023
  113,706
  128,275
  143,708
  159,987
  177,097
  195,029
  213,777
  233,342
  253,728
  274,946
  297,015
  319,957
  343,798
  368,574
  394,322
  421,084
  448,912
  477,855
  507,974
  539,330
  571,988
  606,020
  641,501
  678,511
  717,134
Debt-to-equity ratio
  1.750
  1.930
  2.080
  2.190
  2.290
  2.370
  2.430
  2.490
  2.530
  2.570
  2.600
  2.630
  2.660
  2.680
  2.700
  2.720
  2.730
  2.750
  2.760
  2.770
  2.780
  2.790
  2.800
  2.810
  2.820
  2.820
  2.830
  2.840
  2.840
  2.850
Adjusted equity ratio
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,882
  4,820
  6,954
  9,279
  11,792
  14,488
  17,364
  20,414
  23,635
  27,024
  33,173
  36,892
  40,776
  44,827
  49,045
  53,436
  58,004
  62,754
  67,694
  72,831
  78,175
  83,735
  89,524
  95,551
  101,832
  108,378
  115,205
  122,329
  129,766
  137,533
Depreciation, amort., depletion, $m
  6,566
  7,116
  7,718
  8,372
  9,078
  9,833
  10,638
  11,490
  12,389
  13,334
  10,771
  11,806
  12,887
  14,013
  15,185
  16,403
  17,670
  18,987
  20,355
  21,777
  23,255
  24,792
  26,391
  28,054
  29,786
  31,589
  33,469
  35,428
  37,472
  39,605
Funds from operations, $m
  9,448
  11,936
  14,671
  17,651
  20,870
  24,322
  28,002
  31,904
  36,024
  40,358
  43,944
  48,699
  53,663
  58,839
  64,230
  69,839
  75,674
  81,741
  88,049
  94,608
  101,430
  108,528
  115,914
  123,605
  131,617
  139,967
  148,674
  157,757
  167,238
  177,138
Change in working capital, $m
  434
  481
  527
  573
  618
  662
  705
  747
  787
  828
  867
  907
  946
  986
  1,026
  1,068
  1,110
  1,153
  1,199
  1,246
  1,295
  1,346
  1,400
  1,457
  1,517
  1,580
  1,646
  1,716
  1,790
  1,868
Cash from operations, $m
  9,014
  11,455
  14,144
  17,078
  20,252
  23,660
  27,297
  31,158
  35,237
  39,531
  43,076
  47,792
  52,717
  57,853
  63,203
  68,772
  74,564
  80,588
  86,850
  93,363
  100,135
  107,181
  114,514
  122,148
  130,100
  138,387
  147,028
  156,041
  165,448
  175,270
Maintenance CAPEX, $m
  -2,516
  -3,013
  -3,562
  -4,164
  -4,818
  -5,524
  -6,280
  -7,084
  -7,937
  -8,836
  -9,781
  -10,771
  -11,806
  -12,887
  -14,013
  -15,185
  -16,403
  -17,670
  -18,987
  -20,355
  -21,777
  -23,255
  -24,792
  -26,391
  -28,054
  -29,786
  -31,589
  -33,469
  -35,428
  -37,472
New CAPEX, $m
  -4,218
  -4,668
  -5,119
  -5,563
  -5,998
  -6,423
  -6,839
  -7,245
  -7,642
  -8,032
  -8,418
  -8,801
  -9,184
  -9,570
  -9,961
  -10,360
  -10,769
  -11,192
  -11,630
  -12,087
  -12,564
  -13,063
  -13,587
  -14,139
  -14,719
  -15,331
  -15,976
  -16,656
  -17,374
  -18,131
Cash from investing activities, $m
  -6,734
  -7,681
  -8,681
  -9,727
  -10,816
  -11,947
  -13,119
  -14,329
  -15,579
  -16,868
  -18,199
  -19,572
  -20,990
  -22,457
  -23,974
  -25,545
  -27,172
  -28,862
  -30,617
  -32,442
  -34,341
  -36,318
  -38,379
  -40,530
  -42,773
  -45,117
  -47,565
  -50,125
  -52,802
  -55,603
Free cash flow, $m
  2,279
  3,774
  5,464
  7,351
  9,435
  11,713
  14,179
  16,829
  19,659
  22,663
  24,878
  28,220
  31,726
  35,397
  39,230
  43,228
  47,392
  51,725
  56,233
  60,921
  65,795
  70,863
  76,135
  81,619
  87,327
  93,271
  99,463
  105,916
  112,646
  119,666
Issuance/(repayment) of debt, $m
  6,677
  7,418
  8,134
  8,840
  9,532
  10,208
  10,868
  11,513
  12,144
  12,765
  13,377
  13,986
  14,595
  15,208
  15,829
  16,463
  17,114
  17,786
  18,482
  19,208
  19,965
  20,759
  21,592
  22,468
  23,391
  24,363
  25,388
  26,469
  27,610
  28,813
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  6,677
  7,418
  8,134
  8,840
  9,532
  10,208
  10,868
  11,513
  12,144
  12,765
  13,377
  13,986
  14,595
  15,208
  15,829
  16,463
  17,114
  17,786
  18,482
  19,208
  19,965
  20,759
  21,592
  22,468
  23,391
  24,363
  25,388
  26,469
  27,610
  28,813
Total cash flow (excl. dividends), $m
  8,956
  11,193
  13,598
  16,191
  18,967
  21,920
  25,047
  28,342
  31,803
  35,427
  38,255
  42,206
  46,321
  50,605
  55,059
  59,691
  64,506
  69,511
  74,715
  80,128
  85,760
  91,622
  97,727
  104,088
  110,718
  117,634
  124,851
  132,385
  140,255
  148,480
Retained Cash Flow (-), $m
  -2,245
  -2,526
  -2,770
  -3,010
  -3,245
  -3,476
  -3,700
  -3,920
  -4,135
  -4,346
  -4,555
  -4,762
  -4,969
  -5,178
  -5,390
  -5,605
  -5,827
  -6,056
  -6,293
  -6,540
  -6,798
  -7,068
  -7,352
  -7,650
  -7,964
  -8,295
  -8,644
  -9,012
  -9,401
  -9,810
Prev. year cash balance distribution, $m
  8,675
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  15,386
  8,667
  10,828
  13,181
  15,722
  18,445
  21,346
  24,422
  27,668
  31,081
  33,700
  37,444
  41,352
  45,426
  49,670
  54,085
  58,679
  63,455
  68,423
  73,588
  78,962
  84,554
  90,375
  96,437
  102,754
  109,339
  116,206
  123,373
  130,855
  138,669
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  14,752
  7,934
  9,423
  10,853
  12,186
  13,386
  14,421
  15,264
  15,894
  16,295
  16,004
  15,979
  15,723
  15,250
  14,582
  13,744
  12,768
  11,686
  10,535
  9,351
  8,167
  7,016
  5,923
  4,912
  3,997
  3,190
  2,494
  1,909
  1,428
  1,044
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Broadcom Limited is a designer, developer and global supplier of a range of semiconductor devices with a focus on digital and mixed signal complementary metal oxide semiconductor (CMOS)-based devices and analog III-V based products. The Company operates through four segments: Wired Infrastructure, Wireless Communications, Enterprise Storage, and Industrial & Other. It offers a range of products that are used in end-products, such as enterprise and data center networking, home connectivity, set-top boxes (STBs), broadband access, telecommunication equipment, smartphones, data center servers and storage systems, factory automation, power generation and alternative energy systems, and electronic displays. Its product portfolio ranges from discrete devices to complex sub-systems that include multiple device types, and also includes firmware for interfacing between analog and digital systems. Its products include mechanical hardware that interfaces with optoelectronic or capacitive sensors.

FINANCIAL RATIOS  of  Broadcom (AVGO)

Valuation Ratios
P/E Ratio 56.3
Price to Sales 5.4
Price to Book 4.7
Price to Tangible Book
Price to Cash Flow 14.5
Price to Free Cash Flow 17.4
Growth Rates
Sales Growth Rate 33.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 47.9%
Cap. Spend. - 3 Yr. Gr. Rate 21.2%
Financial Strength
Quick Ratio 96
Current Ratio 0.3
LT Debt to Equity 85.9%
Total Debt to Equity 86.5%
Interest Coverage 7
Management Effectiveness
Return On Assets 3.8%
Ret/ On Assets - 3 Yr. Avg. 4.2%
Return On Total Capital 4.8%
Ret/ On T. Cap. - 3 Yr. Avg. 4.3%
Return On Equity 8.6%
Return On Equity - 3 Yr. Avg. 9.4%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 48.4%
Gross Margin - 3 Yr. Avg. 48.6%
EBITDA Margin 39%
EBITDA Margin - 3 Yr. Avg. 30.6%
Operating Margin 12.6%
Oper. Margin - 3 Yr. Avg. 10.8%
Pre-Tax Margin 10.3%
Pre-Tax Margin - 3 Yr. Avg. 7.8%
Net Profit Margin 9.6%
Net Profit Margin - 3 Yr. Avg. 5.5%
Effective Tax Rate 1.9%
Eff/ Tax Rate - 3 Yr. Avg. -17%
Payout Ratio 103.1%

AVGO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AVGO stock intrinsic value calculation we used $17636 million for the last fiscal year's total revenue generated by Broadcom. The default revenue input number comes from 0001 income statement of Broadcom. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our AVGO stock valuation model: a) initial revenue growth rate of 19.7% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for AVGO is calculated based on our internal credit rating of Broadcom, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Broadcom.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of AVGO stock the variable cost ratio is equal to 36.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $9012 million in the base year in the intrinsic value calculation for AVGO stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Broadcom.

Corporate tax rate of 27% is the nominal tax rate for Broadcom. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the AVGO stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for AVGO are equal to 121.3%.

Life of production assets of 8.5 years is the average useful life of capital assets used in Broadcom operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for AVGO is equal to 12.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $20285 million for Broadcom - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 410.752 million for Broadcom is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Broadcom at the current share price and the inputted number of shares is $95.7 billion.

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COMPANY NEWS

▶ What Is Broadcom Incs (NASDAQ:AVGO) Share Price Doing?   [Oct-13-18 09:51AM  Simply Wall St.]
▶ Pentagon memo calling for Broadcom review is fake, company says   [09:31AM  American City Business Journals]
▶ Steven Romick Buys 2 Stocks in 3rd Quarter   [05:43PM  GuruFocus.com]
▶ Broadcom Issues Statement   [12:11PM  PR Newswire]
▶ Qualcomm adds two new members to its board   [Oct-09-18 08:27AM  Reuters]
▶ 2 Chip Stocks With Growing Dividends   [Oct-07-18 03:27PM  Motley Fool]
▶ Tech leads market selloff after jobs report misses estimates   [Oct-05-18 03:06PM  Yahoo Finance Video]
▶ Broadcoms Breakout May Push Stock 10% Higher   [Oct-03-18 06:00AM  Investopedia]
▶ 28 Undervalued Stocks   [06:00AM  Morningstar]
▶ 6 Reasons Qualcomms CEO Didnt Deserve a Raise   [Sep-26-18 10:16PM  Motley Fool]
▶ Broadcoms Stock Looks Like a Winner   [Sep-21-18 09:30PM  Barrons.com]
▶ Why Broadcom Is Rallying   [Sep-18-18 03:54PM  GuruFocus.com]
▶ Nomura Upgrades Broadcom, Sees Dividend Hike Ahead   [Sep-17-18 02:37PM  Benzinga]
▶ Stocks Open Lower On Trade War Fears; This Chip Giant Upgraded   [09:39AM  Investor's Business Daily]
▶ What This Apple Supplier Told Us About the 2019 iPhones   [Sep-16-18 06:00PM  Motley Fool]
▶ BBig Data, IoT To Drive Semiconductor Growth   [Sep-14-18 08:49AM  Investopedia]
▶ Here's My Top Dividend Stock to Buy in September   [Sep-13-18 06:03PM  Motley Fool]
▶ Company News For Sep 10, 2018   [09:35AM  Zacks]
▶ [$$] Broadcom Finally Makes Its Pitch   [Sep-09-18 08:44PM  The Wall Street Journal]
▶ Broadcom Is Proving the Bears Wrong   [11:21AM  Motley Fool]
▶ Broadcom Benefits From Strong Data Center Demand   [Sep-07-18 08:10PM  Motley Fool]
▶ 3 Stocks to Watch on Friday   [03:22PM  GuruFocus.com]
▶ [$$] Broadcom Finally Makes Its Pitch   [12:56PM  The Wall Street Journal]
▶ Why Broadcom Is Rallying Again   [11:29AM  Barrons.com]
▶ [$$] Why Broadcom Is Rallying Again   [11:29AM  Barrons.com]

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