Broadcom is expected to report an EPS of $10.18 on revenue of $8.9bn tomorrow. The firm has beaten market expectations every quarter since 4th of June 2020
Overview
Broadcom is an American company that creates, develops, produces, and exports a vast array of semiconductor and infrastructure software products worldwide. The data centre, networking, software, internet, wireless, storage, and industrial industries are all served by Broadcom's product line.
Financials
Taking a look at the company’s income statement, for the fiscal year 2022, revenue was $33.2bn and gross profit was $22.1bn versus $27.4bn and $16.8bn in 2021. Net profit after tax and expenses came in at $11.2bn, meaning the company is operating at a 33% profit margin. The earnings per share almost doubled year-on-year, reporting an EPS of $27.44 up from $15.70 in the previous year. Over to the balance sheet, cash on hand sits strongly at $12.4bn, although the overall value of assets fell by $2bn. This was due to a decrease in goodwill and intangible assets. The total liabilities have remained the same at $50bn and even though the liabilities had no upside or downside movement, the decline in assets led to an overall decline of $2bn in equity. Equity sits at $22.7bn, but still, it's in the range it has been for the past 5 years.
Technicals
The company’s share price currently sits at $594.14 a share. From a technical outlook, we can see that on the daily interval the support is established below along the trendline. Support sits at $579.86 then a key level at $572.10. A break below $572.10 could see the price decline further towards the $560 mark. But as the bias remains positive, the next major resistance level sits at $616.94 (red oval), a break and close above this level could see the price hike higher towards the range of $620-$625. Looking at the technical indicators, MACD is negative and RSI is neutral but heading towards positive as it reads 53.
Summary
Overall, Broadcom’s financials are strong. The company continues to maintain a healthy balance regarding its balance sheets with a strong cash-on-hand stockpile (record high). The small decline in assets is overshadowed by the rest of its financial situation. Based on the technicals, we can see support is sat firmly below and yesterday’s bounce from the trendline may be an indicator for a continuation of the bullish trend. However, important to note, Broadcom is set to report its first quarterly earnings tomorrow of the year. It is expected to report earnings of $10.18 on revenue of $8.9bn, the company has beaten market expectations every quarter since the 4th of June 2020. Nevertheless, a negative report/guidance tomorrow could see the price drop.
