After market close today, semiconductor giant Broadcom (NASDAQ: AVGO) released its Fiscal Q3-2022 earnings results. Both earnings per share (EPS) and revenue came in stronger than expected. The company’s Q4 guidance also came ahead of market expectations. As a result, the stock is trending slightly higher in the after-hours session.
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Broadcom’s revenue of $8.46 billion grew 25% on a year-over-year basis, beating the consensus estimate of about $8.41 billion. AVGO’s earnings per share came in at $9.73, beating the $9.56 estimate, and its Q3 non-GAAP net income was $4.24 billion, better than the ~$3.12 billion gain in the same quarter last year.
In addition, Broadcom’s free cash flow (FCF) margin was 51%, resulting in FCF of about $4.31 billion for the quarter, much higher than the $3.43 billion recorded last year. The company ended the quarter with nearly $10 billion in cash & cash equivalents but with $39.5 billion in debt.
In addition, AVGO’s upbeat revenue guidance definitely pleased investors. For Q4, AVGO is projecting revenue of $8.9 billion, implying 20% year-over-year growth at the midpoint. Analysts were expecting Q4 revenue to come in at $8.72 billion. Also, the company expects its EBITDA margin to be 63% in Q4.
What is AVGO Stock’s Price Target?
Turning to Wall Street, Broadcom stock earns a Strong Buy consensus rating based on four unanimous Buy ratings assigned in the past three months. The average AVGO stock price prediction of $660 implies 34.1% upside potential.
Broadcom’s Dividend Prospects Look Enticing
Broadcom currently pays a relatively-high dividend, especially for a tech stock; its yield comes in at around 3.3%. Also, its nearly 35% five-year dividend compound annual growth rate (CAGR) makes it an enticing dividend-growth stock. With a free cash flow payout ratio hovering around the mid-40% range, Broadcom’s dividend seems safe, and there is plenty of room for further dividend increases.
The company should also benefit from the long-term growth trajectory of the semiconductor industry, which will aid its dividend growth.
Conclusion: Broadcom’s Solid Q3 Results Pleased Investors
Broadcom’s results were better than expectations in every aspect. This caused the stock to rally in the after-hours trading session (although only slightly). AVGO looks like a solid, high-growth dividend stock. It also has the backing of analysts, who are unanimously bullish on the stock. Therefore, it is one worth considering.
