Is Broadcom (NASDAQ:AVGO) A Risky Investment?

Simply Wall St.11-21

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.' When we think about how ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2485469022?lang=en_US&edition=fundamental","thumbnail":"https://s.yimg.com/uu/api/res/1.2/HFaEAZwkIm4VfcvWbvZ8Wg--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/90de6a8d90c78bab83054b6677342f72","is_english":true,"pubTime":"2024-11-21 19:00","share_image_url":"https://static.laohu8.com/5f26f4a48f9cb3e29be4d71d3ba8c038","id":"2485469022","market":"us","top_or_hot":-1,"title":"Is Broadcom (NASDAQ:AVGO) A Risky Investment?","media":"Simply Wall St.","content":"<div>\n<p>Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.' When we think about how ...</p>\n\n<a href=\"https://finance.yahoo.com/news/broadcom-nasdaq-avgo-risky-investment-110017827.html\">Source Link</a>\n\n</div>\n","source":"yahoofinance","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Is Broadcom (NASDAQ:AVGO) A Risky Investment?</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIs Broadcom (NASDAQ:AVGO) A Risky Investment?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-21 19:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/broadcom-nasdaq-avgo-risky-investment-110017827.html><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.' When we think about how ...</p>\n\n<a href=\"https://finance.yahoo.com/news/broadcom-nasdaq-avgo-risky-investment-110017827.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU2430703095.HKD","symbol_name":"WELLINGTON MULTI-ASSET HIGH INCOME \"AM4\" (HKD) INC","start_time":0,"source_url":"https://finance.yahoo.com/news/broadcom-nasdaq-avgo-risky-investment-110017827.html","article_id":"2485469022","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/HFaEAZwkIm4VfcvWbvZ8Wg--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/90de6a8d90c78bab83054b6677342f72"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2485469022","pubTimestamp":1732186817,"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. We note that Broadcom Inc.  does have debt on its balance sheet. But is this debt a concern to shareholders?Broadcom's debt is 2.6 times its EBITDA, and its EBIT cover its interest expense 5.1 times over. Taken together this implies that, while we wouldn't want to see debt levels rise, we think it can handle its current leverage. Sadly, Broadcom's EBIT actually dropped 9.0% in the last year. If earnings continue on that decline then managing that deb","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU2430703095.HKD":"WELLINGTON MULTI-ASSET HIGH INCOME \"AM4\" (HKD) INC","BK4112":"金融交易所和数据","QID":"纳指两倍做空ETF","SG9999015952.SGD":"LIONGLOBAL DISRUPTIVE INNOVATION \"I\" (SGD) ACC","LU0170899867.USD":"EASTSPRING INVESTMENTS WORLD VALUE EQUITY  \"A\" (USD) ACC","LU0256863902.USD":"ALLIANZ US EQUITY \"AT\" (USD) ACC","BK4598":"佩洛西持仓","LU0444973449.USD":"CT (LUX) I GLOBAL TECHNOLOGY \"DU\" (USD) ACC","LU2095319765.USD":"Natixis Thematics Subscription Economy R/A USD","IE00BN8TJ469.HKD":"FTGF CLEARBRIDGE TACTICAL DIVIDEND INCOME \"A\" (HKD) INC","LU0061474960.USD":"天利环球焦点基金AU Acc","LU1989764664.SGD":"CPR Invest - Global Disruptive Opportunities A2 Acc SGD-H","IE00BMPRXR70.SGD":"Neuberger Berman 5G Connectivity A Acc SGD-H","LU2237443978.SGD":"Aberdeen Standard SICAV I - Global Dynamic Dividend A Acc SGD-H","IE00BMPRXN33.USD":"NEUBERGER BERMAN 5G CONNECTIVITY \"A\" (USD) ACC","LU1935042215.USD":"MANULIFE GF GLOBAL MULTI-ASSET DIVERSIFIED INCOME  \"AA\" (USD) INC A","LU0820561909.HKD":"ALLIANZ INCOME AND GROWTH \"AM\" (HKD) INC","SG9999004303.SGD":"Nikko AM Shenton Global Opportunities SGD","LU0957808578.USD":"THREADNEEDLE (LUX) GLOBAL TECHNOLOGY \"ZU\" (USD) ACC","SQQQ":"纳指三倍做空ETF","LU0320765646.SGD":"FTIF - Franklin Income A MDIS SGD-H1","LU2237957902.USD":"NIKKO AM GLOBAL EQUITY \"F\" (USD) ACC","AVGOP":"BROADCOM INC PFD SER A 22","BK4533":"AQR资本管理(全球第二大对冲基金)","QLD":"纳指两倍做多ETF","PSQ":"纳指反向ETF","AVGO":"博通","IE00B64PRP62.GBP":"GUINNESS GLOBAL MONEY MANAGERS \"C\" (GBP) ACC","IE00BK4W5M84.HKD":"HSBC GLOBAL FUNDS ICAV US EQUITY INDEX \"HC\" (HKD) ACC","LU1935043023.USD":"MANULIFE GF GLOBAL MULTI-ASSET DIVERSIFIED INCOME \"AA\" (USD) INC A","IE00B3QW5Z07.USD":"GUINNESS GLOBAL MONEY MANAGERS \"C\" (USD) ACC","IE00BYV24P56.USD":"GUINNESS EMERGING MARKETS EQUITY INCOME \"C\" (USD) ACC","SG9999001424.SGD":"United E-Commerce Fund SGD","NDAQ":"纳斯达克OMX交易所","LU0787776722.HKD":"AB SELECT US EQUITY PORTFOLIO \"A\" (HKD) ACC","TQQQ":"纳指三倍做多ETF","LU1548497426.USD":"安联环球人工智能AT Acc","LU0234572021.USD":"高盛美国核心股票组合Acc","BK4551":"寇图资本持仓",".IXIC":"NASDAQ Composite","IE00BKVL7J92.USD":"Legg Mason ClearBridge - US Equity Sustainability Leaders A Acc USD","LU2237443895.HKD":"abrdn SICAV I -  GLOBAL DYNAMIC DIVIDEND \"A\" (HKD) ACC","BK4581":"高盛持仓","EBIT":"Harbor AlphaEdge Small Cap Earners ETF","IE00BLSP4452.SGD":"Legg Mason ClearBridge - Tactical Dividend Income A Mdis SGD-H Plus","LU1917777945.USD":"安联专题基金Cl AT Acc","LU1935042488.USD":"MANULIFE GF GLOBAL MULTI-ASSET DIVERSIFIED INCOME  \"AA\" (USD) INC"},"translate_title":"博通（纳斯达克：AVGO）是一项有风险的投资吗？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"AVGO":1,"AVGOP":1,".IXIC":1,"EBIT":1,"NDAQ":1,"TQQQ":0.6,"PSQ":0.6,"QID":0.6,"QLD":0.6,"SQQQ":0.6,"MNQmain":0.6,"NQmain":0.6},"content_text":"Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. We note that Broadcom Inc. (NASDAQ:AVGO) does have debt on its balance sheet. But is this debt a concern to shareholders? \n When Is Debt A Problem? \n Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. Of course, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. When we examine debt levels, we first consider both cash and debt levels, together. \n Check out our latest analysis for Broadcom \n How Much Debt Does Broadcom Carry? \n The image below, which you can click on for greater detail, shows that at August 2024 Broadcom had debt of US$69.9b, up from US$39.3b in one year. On the flip side, it has US$9.95b in cash leading to net debt of about US$59.9b. \n\n\n\n  NasdaqGS:AVGO Debt to Equity History November 21st 2024\n \n\n How Strong Is Broadcom's Balance Sheet? \n We can see from the most recent balance sheet that Broadcom had liabilities of US$19.2b falling due within a year, and liabilities of US$83.1b due beyond that. Offsetting this, it had US$9.95b in cash and US$6.22b in receivables that were due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by US$86.1b. \n Of course, Broadcom has a titanic market capitalization of US$772.3b, so these liabilities are probably manageable. But there are sufficient liabilities that we would certainly recommend shareholders continue to monitor the balance sheet, going forward. \n In order to size up a company's debt relative to its earnings, we calculate its net debt divided by its earnings before interest, tax, depreciation, and amortization (EBITDA) and its earnings before interest and tax (EBIT) divided by its interest expense (its interest cover). The advantage of this approach is that we take into account both the absolute quantum of debt (with net debt to EBITDA) and the actual interest expenses associated with that debt (with its interest cover ratio). \n Broadcom's debt is 2.6 times its EBITDA, and its EBIT cover its interest expense 5.1 times over. Taken together this implies that, while we wouldn't want to see debt levels rise, we think it can handle its current leverage. Sadly, Broadcom's EBIT actually dropped 9.0% in the last year. If earnings continue on that decline then managing that debt will be difficult like delivering hot soup on a unicycle. When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine Broadcom's ability to maintain a healthy balance sheet going forward. So if you're focused on the future you can check out this free report showing analyst profit forecasts. \n Finally, a business needs free cash flow to pay off debt; accounting profits just don't cut it. So the logical step is to look at the proportion of that EBIT that is matched by actual free cash flow. Over the last three years, Broadcom actually produced more free cash flow than EBIT. That sort of strong cash conversion gets us as excited as the crowd when the beat drops at a Daft Punk concert. \nOur View\n When it comes to the balance sheet, the standout positive for Broadcom was the fact that it seems able to convert EBIT to free cash flow confidently. But the other factors we noted above weren't so encouraging. For instance it seems like it has to struggle a bit to grow its EBIT. Considering this range of data points, we think Broadcom is in a good position to manage its debt levels. But a word of caution: we think debt levels are high enough to justify ongoing monitoring. When analysing debt levels, the balance sheet is the obvious place to start. However, not all investment risk resides within the balance sheet - far from it. For instance, we've identified   4 warning signs for Broadcom  that you should be aware of. \n When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now. \nHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":1,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2485469022"}