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After a scorching-hot run, semiconductor stocks cooled off in 2022, impacting many portfolios. SOXX, the iShares Semiconductor ETF, is down more than 30% year-to-date, widely underperforming compared to the S&P 500.
In addition, other popular chip stocks, including NVIDIA (NVDA - Free Report) and Advanced Micro Devices (AMD - Free Report) , have performed poorly in 2022, as shown in the chart below.
Image Source: Zacks Investment Research
However, Broadcom (AVGO - Free Report) has entirely snapped the overall bearish trend, with shares climbing more than 25% after bottoming in October. As we can see, the performance has crushed the S&P 500.
Image Source: Zacks Investment Research
Broadcom is a premier designer, developer, and global supplier of a broad range of semiconductor devices. The company’s products are used in end products such as enterprise and data center networking, home connectivity, set-top boxes, and broadband access, to name a few.
Let’s take a closer look at how the company currently stacks up.
Quarterly Performance
Broadcom’s earnings track record is mighty impressive; AVGO has exceeded top and bottom line estimates in eleven consecutive quarters.
The company penciled in a 1.8% EPS beat paired with revenue 0.4% above expectations in its latest release, providing shares the fuel they needed. AVGO has a favorable revenue trend, as seen in the chart below.
Image Source: Zacks Investment Research
Dividends & Cash Flow
For those that seek income, AVGO has that covered. The company’s annual dividend currently yields a rock-solid 3.3%, notably higher than the Zacks Computer and Technology sector average.
Undoubtedly a positive, the company has shown a commitment to increasingly rewarding its shareholders, upping its dividend payout five times over the last five years and carrying a sizable 26% five-year annualized growth rate.
Image Source: Zacks Investment Research
In addition, the company’s free cash flow strength is hard to ignore; in its latest quarter, Broadcom generated roughly $4.5 billion in free cash flow, good enough for a 4% sequential uptick and an even larger 30% Y/Y uptick.
Image Source: Zacks Investment Research
Growth Outlook
For the cherry on top, Broadcom carries a favorable growth profile, with earnings and revenue forecasted to climb 7.4% and 5% in FY23, respectively.
And in FY24, estimates call for an additional 7% growth in earnings and a 4.9% Y/Y uptick in revenue.
Image Source: Zacks Investment Research
Bottom Line
Semiconductors have sailed through challenging waters in 2022, ending stellar runs.
However, Broadcom (AVGO - Free Report) has been an exception to the poor performance, widely outperforming other semiconductor stocks and embarking on a strong run since bottoming in October.
The company has consistently exceeded quarterly estimates, rewards investors handsomely, generates solid cash, and has an inspiring growth trajectory for the foreseeable future.
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This Large-Cap Semiconductor Stock Has Been Hot
After a scorching-hot run, semiconductor stocks cooled off in 2022, impacting many portfolios. SOXX, the iShares Semiconductor ETF, is down more than 30% year-to-date, widely underperforming compared to the S&P 500.
In addition, other popular chip stocks, including NVIDIA (NVDA - Free Report) and Advanced Micro Devices (AMD - Free Report) , have performed poorly in 2022, as shown in the chart below.
Image Source: Zacks Investment Research
However, Broadcom (AVGO - Free Report) has entirely snapped the overall bearish trend, with shares climbing more than 25% after bottoming in October. As we can see, the performance has crushed the S&P 500.
Image Source: Zacks Investment Research
Broadcom is a premier designer, developer, and global supplier of a broad range of semiconductor devices. The company’s products are used in end products such as enterprise and data center networking, home connectivity, set-top boxes, and broadband access, to name a few.
Let’s take a closer look at how the company currently stacks up.
Quarterly Performance
Broadcom’s earnings track record is mighty impressive; AVGO has exceeded top and bottom line estimates in eleven consecutive quarters.
The company penciled in a 1.8% EPS beat paired with revenue 0.4% above expectations in its latest release, providing shares the fuel they needed. AVGO has a favorable revenue trend, as seen in the chart below.
Image Source: Zacks Investment Research
Dividends & Cash Flow
For those that seek income, AVGO has that covered. The company’s annual dividend currently yields a rock-solid 3.3%, notably higher than the Zacks Computer and Technology sector average.
Undoubtedly a positive, the company has shown a commitment to increasingly rewarding its shareholders, upping its dividend payout five times over the last five years and carrying a sizable 26% five-year annualized growth rate.
Image Source: Zacks Investment Research
In addition, the company’s free cash flow strength is hard to ignore; in its latest quarter, Broadcom generated roughly $4.5 billion in free cash flow, good enough for a 4% sequential uptick and an even larger 30% Y/Y uptick.
Image Source: Zacks Investment Research
Growth Outlook
For the cherry on top, Broadcom carries a favorable growth profile, with earnings and revenue forecasted to climb 7.4% and 5% in FY23, respectively.
And in FY24, estimates call for an additional 7% growth in earnings and a 4.9% Y/Y uptick in revenue.
Image Source: Zacks Investment Research
Bottom Line
Semiconductors have sailed through challenging waters in 2022, ending stellar runs.
However, Broadcom (AVGO - Free Report) has been an exception to the poor performance, widely outperforming other semiconductor stocks and embarking on a strong run since bottoming in October.
The company has consistently exceeded quarterly estimates, rewards investors handsomely, generates solid cash, and has an inspiring growth trajectory for the foreseeable future.