After participating in a massive sell-off in tech stocks, the pathway for share gains for Broadcom (AVGO) - Get Broadcom Inc. Report on a solid earnings report was cleared. The company delivered a beat of expectations on both the top and bottom lines as well as a strong guide for the current quarter.
The stock fell 6% in regular hours, sending the valuation down to about 15 times next year’s earnings estimates, which is the higher end of its valuation range for the last few years. The stock then rose as much as 1.95% in post-market trading upon earnings.
Here were the results against Wall Street’s estimates:
- Revenue: $5.82B v. $5.77B (actual result: +5.6% year-over-year)
- Operating Margin: 54% v. 53%
- Adjusted EPS: $5.40 v. $5.24 (+4.6%)
Revenue also rose 6% quarter-over-quarter, pointing to continued strength in demand for hardware products as economies recover.
Management guided for current quarter revenue of $6.4 billion at the midpoint of its range, better than some analyst’s expectation. The margin on EBITDA (earnings-before-interest-tax and non-cash expenses) is guided for 58.5%, representing expansion from the reported quarter.
"Our outlook for the fourth quarter reflects a strong anticipated ramp in wireless, as well as the continuing surge in demand for networking from cloud and telecom customers, more than offsetting expected softness in enterprise,” said CEO Hok Tan. This potentially points to strong demand in 5G.
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