Stock on Trader’s Radar: Broadcom Limited (NASDAQ:AVGO)

Broadcom Limited (NASDAQ:AVGO) reported earnings for the three months ended April 2016 on June 02, 2016. The company earned $2.53 per share on revenue of $3.56B. Analysts had been modeling earning per share of $2.38 with $3.55B in revenue.

Broadcom Limited (NASDAQ:AVGO) reported financial results for the second quarter of its fiscal year 2016, ended May 1, 2016, and provided guidance for the third quarter of its fiscal year 2016.

  • Quarterly GAAP gross margin of 30 percent; Quarterly non-GAAP gross margin from continuing operations of 60 percent
  • Quarterly GAAP diluted loss per share of $3.02; Quarterly non-GAAP diluted earnings per share from continuing operations of $2.53
  • Quarterly interim dividend of 50 cents per share

Second Quarter Fiscal Year 2016 GAAP Results

Net revenue was $3,541 million, an increase of 100 percent from $1,771 million in the previous quarter and an increase of 119 percent from $1,614 million in the same quarter last year.

Gross margin was $1,046 million, or 30 percent of net revenue. This compares with gross margin of $941 million, or 53 percent of net revenue in the prior quarter, and gross margin of $846 million, or 52 percent of net revenue in the same quarter last year.

Operating expenses were $2,047 million. This compares with $466 million in the prior quarter and $428 million for the same quarter last year.

Operating loss was $1,001 million, or 28 percent of net revenue. This compares with operating income of $475 million, or 27 percent of net revenue, in the prior quarter, and $418 million, or 26 percent of net revenue, in the same quarter last year.

Net loss, which includes the impact of discontinued operations, was $1,255 million, or $3.02 per diluted share. This compares with net income of $377 million, or $1.30 per diluted share, for the prior quarter, and $344 million, or $1.21 per diluted share in the same quarter last year.

Net loss attributable to ordinary shares was $1,186 million. Net loss attributable to noncontrolling interest (restricted exchangeable limited partnership units (“REUs”) in the Company’s subsidiary, Broadcom Cayman L.P. (the “Partnership”) was $69 million.

Second Quarter Fiscal Year 2016 Non-GAAP Results From Continuing Operations

The differences between the Company’s GAAP and non-GAAP results are described generally under “Non-GAAP Financial Measures” below, and presented in detail in the financial reconciliation tables attached to this release.

Net revenue from continuing operations was $3,562 million, an increase of 100 percent from $1,782 million in the previous quarter, and an increase of 117 percent from $1,645 million in the same quarter last year.

Gross margin from continuing operations was $2,138 million, or 60 percent of net revenue. This compares with gross margin of $1,089 million, or 61 percent of net revenue, in the prior quarter, and gross margin of $998 million, or 61 percent of net revenue, in the same quarter last year.

Operating income from continuing operations was $1,329 million, or 37 percent of net revenue. This compares with operating income from continuing operations of $783 million, or 44 percent of net revenue, in the prior quarter, and $701 million, or 43 percent of net revenue, in the same quarter last year.

Net income from continuing operations was $1,120 million, or $2.53 per diluted share. This compares with net income of $710 million, or $2.41 per diluted share last quarter, and net income of $620 million, or $2.13 per diluted share, in the same quarter last year.

Broadcom Limited earnings per share showed an increasing trend of 327.7% for the current fiscal year. The company’s expected EPS growth rate for next fiscal year is 1296%.Analysts project EPS growth over the next 5 years at 15.83%. It has EPS annual growth over the past 5 fiscal years of 24% when sales grew 26.7. It reported 119.4% sales growth, and -360.1% EPS decline in the last quarter.

The stock is trading at $158.62, up 60.64% from 52-week low of $100. The stock trades down -4.14% from its peak of $166 and % below the consensus price target of $193.31. Its volume clocked up at 2.44 million shares which is lower than the average volume of 2.53 million shares. Its market capitalization currently stands at $61.36B.

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