Why Broadcom (BRCM) Is Up Today

NEW YORK (TheStreet) -- Broadcom (BRCM) gained 2.6% to $29.98 Friday following an earnings report that surpassed estimates.

The chipmaker reported revenue of $2.06 billion for the fourth quarter, which is down 0.8% from the year-ago quarter. Analysts surveyed by Thomson Reuters estimated revenue of $2.02 billion for the quarter. Broadcom reported earnings of 60 cents a share, beating the analyst estimate of 57 cents a share.

Revenue from the mobile and wireless segment fell 7% for Broadcom in the fourth quarter, which was expected. The company expects similar revenue drops in the segment in the first quarter due to its customers reducing inventory of mobile chips.

Broadcom expects revenue between $1.9 billion and $2 billion in the first quarter, while analysts estimate revenue of$ 1.967 billion for the quarter.

TheStreet Ratings team rates BROADCOM CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate BROADCOM CORP (BRCM) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and a generally disappointing performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 43.6% when compared to the same quarter one year prior, rising from $220.00 million to $316.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 5.0%. Since the same quarter one year prior, revenues slightly increased by 0.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • BROADCOM CORP has improved earnings per share by 44.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, BROADCOM CORP reported lower earnings of $1.24 versus $1.64 in the prior year. This year, the market expects an improvement in earnings ($2.69 versus $1.24).
  • BRCM has underperformed the S&P 500 Index, declining 14.31% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. 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.
  • You can view the full analysis from the report here: BRCM Ratings Report

More from Markets

Inside Carnival's Mind Blowing New Horizon Cruise Ship (Video)

Inside Carnival's Mind Blowing New Horizon Cruise Ship (Video)

Jim Cramer: The 10-Year Yield Could Go to 2.75%

Jim Cramer: The 10-Year Yield Could Go to 2.75%

Oil Slumps, Gas Spikes Ahead of Holiday Weekend; Assessing the Chipmakers--ICYMI

Oil Slumps, Gas Spikes Ahead of Holiday Weekend; Assessing the Chipmakers--ICYMI

Week Ahead: Wall Street Looks to Jobs Report as North Korea Meeting Less Certain

Week Ahead: Wall Street Looks to Jobs Report as North Korea Meeting Less Certain

Dow and S&P 500 Decline, Energy Shares Fall as U.S. Crude Oil Slides 4%

Dow and S&P 500 Decline, Energy Shares Fall as U.S. Crude Oil Slides 4%