Trade-Ideas: Broadcom Corporation (BRCM) Is Today's Pre-Market Laggard Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Broadcom Corporation ( BRCM) as a pre-market laggard candidate. In addition to specific proprietary factors, Trade-Ideas identified Broadcom Corporation as such a stock due to the following factors:

  • BRCM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $257.8 million.
  • BRCM traded 16,746 shares today in the pre-market hours as of 8:44 AM.
  • BRCM is down 2.1% today from Friday's close.

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More details on BRCM:

Broadcom Corporation provides semiconductor solutions for wired and wireless communications. Its products offer voice, video, data, and multimedia connectivity in the home, office, and mobile environments. The stock currently has a dividend yield of 1.6%. BRCM has a PE ratio of 38.0. Currently there are 25 analysts that rate Broadcom Corporation a buy, 1 analyst rates it a sell, and 10 rate it a hold.

The average volume for Broadcom Corporation has been 10.8 million shares per day over the past 30 days. Broadcom has a market cap of $14.5 billion and is part of the technology sector and electronics industry. The stock has a beta of 0.98 and a short float of 2% with 1.06 days to cover. Shares are down 17.7% year to date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Broadcom Corporation as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 13.9%. Since the same quarter one year prior, revenues slightly increased by 6.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • BRCM's debt-to-equity ratio is very low at 0.21 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, BRCM has a quick ratio of 1.95, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for BROADCOM CORP is rather high; currently it is at 54.69%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -12.00% is in-line with the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 256.9% when compared to the same quarter one year ago, falling from $160.00 million to -$251.00 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, BROADCOM CORP's return on equity is below that of both the industry average and the S&P 500.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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