Stock Analysis
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- NasdaqGS:AVGO
Despite Strong Fundamentals, Insiders have been Selling Broadcom (NASDAQ:AVGO) Stock in the last 12 Months
Broadcom (NASDAQ:AVGO) is continuously increasing fundamental performance and posting high shareholder returns, both with stock gains and dividend increases. It seems that some insiders have been selling stock, and we would like to weigh the company performance with the possible sentiment that insiders might have on their own company.
Check out our latest analysis for Broadcom
While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.
First, looking at the fundamentals, there are a few things that stand out:
- Broadcom is increasingly profitable, with a profit margin of 23.4%
- The company is continuously growing, with a 15% revenue growth in the last 12 months and a projected 7.3% annual revenue growth in the next year
- The company is profitable and earnings per share is expected to grow at 19.4%
- The free cash flows are higher than statutory profits and are currently at US$13.2b for the last 12 months
- The upcoming quarterly dividend will be US$4.1 per share, at the current US$642 per share, that is an effective yield of 2.5%
We can see that the stock has a solid foundation for investors, and we will compare that with what has been going on with insiders in the last 12 months.
The Last 12 Months Of Insider Transactions At Broadcom
Over the last year, we saw more insider selling of Broadcom shares, than buying.
The average sell price was around US$492, which means that some insiders deemed the stock price reasonable to dispose at a lower price point.
You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below.
If you want to know exactly who sold, for how much, and when, simply click on the graph below!
For those who like to find winning investments, this free list of growing companies with recent insider purchasing, could be just the ticket.
Additionally, we took a look at the % of shares that insiders own. A high insider ownership often makes company leadership more mindful of shareholder interests.
Broadcom's insiders own about US$4.4b worth of shares (which is 1.7% of the company). On an absolute basis that is reasonably high, especially considering that Broadcom is a US$265b Market Cap Company, percentage wise, it amounts to 1.7% which means that management might not be completely aligned with the interests of shareholders.
Conclusion
Broadcom has solid fundamentals driven by profit, continuous growth and positive free cash flows. The company has been successfully returning cash to shareholders via dividends, buybacks and delivering price appreciation.
Insiders have been also continuously selling the stock in moderate amounts for the last 12 months, this might give one pause, and prompt investors to take a deeper dive into the future return prospects of the stock.
In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Broadcom. For example - Broadcom has 4 warning signs we think you should be aware of.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.
What are the risks and opportunities for Broadcom?
Broadcom Inc. designs, develops, and supplies various semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor based devices and analog III-V based products worldwide.
Rewards
Earnings are forecast to grow 6.49% per year
Earnings grew by 67.6% over the past year
Risks
Shareholders have been diluted in the past year
Significant insider selling over the past 3 months
Has a high level of debt
Further research on
Broadcom
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
Simply Wall St analyst Goran Damchevski and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Goran Damchevski
Goran is an Equity Analyst and Writer at Simply Wall St over 4 years of experience in financial analysis and company research. Personally, Goran has over 4 years of experience in financial analysis and company research, where he previously worked in a seed-stage startup as a capital markets research analyst and product lead and developed a financial data platform for equity investors.
About NasdaqGS:AVGO
Broadcom
Broadcom Inc. designs, develops, and supplies various semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor based devices and analog III-V based products worldwide.
Solid track record established dividend payer.
