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Broadcom (AVGO) to Report Q2 Results: What's in Store?
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Broadcom Limited (AVGO - Free Report) is set to release second-quarter fiscal 2017 results on Jun 1. Last quarter, the company posted a positive earnings surprise of 5.63%. We note that the company delivered positive earnings surprises in all of the trailing four quarters, with an average beat of 5.95%.
Earnings (excluding stock-based compensation) surged almost 60% from the year-ago quarter and 4.8% sequentially to $3.63 per share.
Moreover, Non-GAAP revenues from continuing operations were $4.149 billion, soaring a massive 132.8% from the year-ago quarter. The figure was roughly in line with management’s guidance and slightly better than the Zacks Consensus Estimate of $4.061 billion.
Notably, Broadcom has been one of the most consistent performers in the S&P 500 Index. Shares have increased almost 36.5% on a year-to-date basis as compared with Index’s return of 8.3%.
We note that the divestiture of the Brocade’s data-center switching, analytics and routing business to Extreme Networks (EXTR - Free Report) was a prudent step in getting the regulatory approval for the Brocade. Earlier this month, the company received approval from the European regulators, which removes a major headwind.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Broadcom’s extensive product portfolio serves multiple applications within four primary end markets – wired infrastructure, wireless communications, enterprise storage, and industrial & others. The company’s focus on multiple target markets and geographies mitigates operating risks and lessens exposure to volatility in any single market.
For second-quarter fiscal 2017, Broadcom forecasts non-GAAP revenues of almost $4.100 billion (+/- $75 million). Management anticipates Wired Infrastructure business revenues to be a little bit stronger than the first quarter, driven by strong continuous momentum in demand from cloud data centers, and improving demand for broadband access and set-top box products.
Wireless Communications revenues are anticipated to decline in the single-digit percentage range as the weak demand from the North American customer is partially mitigated by ramp up of the next generation phone from the company’s large Korean smartphone customer.
Broadcom expects flat revenues at the Enterprise Storage segment due to seasonality. Industrial revenue is anticipated to increase sequentially in the high-single digits.
We believe that the second-quarter result will benefit from strong adoption of Samsung’s Galaxy 8, which uses Broadcom’s chips.
Earnings Whispers
Our proven model does not conclusively show that Broadcom is likely to beat earnings in the soon-to-be-reported quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: The Earnings ESP for Broadcom is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $3.02. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Broadcom’s Zacks Rank #3 when combined with an Earnings ESP of 0.00%, makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a couple of stocks you may want to consider as our model shows that they have the right combination of elements to post an earnings beat:
Coupa Software with an Earnings ESP of 4% and a Zacks Rank #3.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>
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Broadcom (AVGO) to Report Q2 Results: What's in Store?
Broadcom Limited (AVGO - Free Report) is set to release second-quarter fiscal 2017 results on Jun 1. Last quarter, the company posted a positive earnings surprise of 5.63%. We note that the company delivered positive earnings surprises in all of the trailing four quarters, with an average beat of 5.95%.
Earnings (excluding stock-based compensation) surged almost 60% from the year-ago quarter and 4.8% sequentially to $3.63 per share.
Moreover, Non-GAAP revenues from continuing operations were $4.149 billion, soaring a massive 132.8% from the year-ago quarter. The figure was roughly in line with management’s guidance and slightly better than the Zacks Consensus Estimate of $4.061 billion.
Notably, Broadcom has been one of the most consistent performers in the S&P 500 Index. Shares have increased almost 36.5% on a year-to-date basis as compared with Index’s return of 8.3%.
We note that the divestiture of the Brocade’s data-center switching, analytics and routing business to Extreme Networks (EXTR - Free Report) was a prudent step in getting the regulatory approval for the Brocade. Earlier this month, the company received approval from the European regulators, which removes a major headwind.
Broadcom Limited Price and EPS Surprise
Broadcom Limited Price and EPS Surprise | Broadcom Limited Quote
Let’s see how things are shaping up for this announcement.
Factors to Consider
Broadcom’s extensive product portfolio serves multiple applications within four primary end markets – wired infrastructure, wireless communications, enterprise storage, and industrial & others. The company’s focus on multiple target markets and geographies mitigates operating risks and lessens exposure to volatility in any single market.
For second-quarter fiscal 2017, Broadcom forecasts non-GAAP revenues of almost $4.100 billion (+/- $75 million). Management anticipates Wired Infrastructure business revenues to be a little bit stronger than the first quarter, driven by strong continuous momentum in demand from cloud data centers, and improving demand for broadband access and set-top box products.
Wireless Communications revenues are anticipated to decline in the single-digit percentage range as the weak demand from the North American customer is partially mitigated by ramp up of the next generation phone from the company’s large Korean smartphone customer.
Broadcom expects flat revenues at the Enterprise Storage segment due to seasonality. Industrial revenue is anticipated to increase sequentially in the high-single digits.
We believe that the second-quarter result will benefit from strong adoption of Samsung’s Galaxy 8, which uses Broadcom’s chips.
Earnings Whispers
Our proven model does not conclusively show that Broadcom is likely to beat earnings in the soon-to-be-reported quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: The Earnings ESP for Broadcom is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $3.02. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Broadcom’s Zacks Rank #3 when combined with an Earnings ESP of 0.00%, makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a couple of stocks you may want to consider as our model shows that they have the right combination of elements to post an earnings beat:
Science Applications International (SAIC - Free Report) with an Earnings ESP of 17% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Coupa Software with an Earnings ESP of 4% and a Zacks Rank #3.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>