Broadcom Corporation Quarterly Valuation – November 2014 $BRCM

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After looking over the company’s fundamentals, Broadcom does not qualify for the Defensive Investor as there are concerns regarding the company’s short dividend history and high PEmg and PB ratios. In contrast, the Enterprising Investor has no initial concerns. As a result, Enterprising Investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

Estimating the intrinsic value requires examining the company’s earnings history. Broadcom has seen its EPSmg (normalized earnings) grow from $0.87 in 2010 to only an estimated $1.33 for 2014. This level of demonstrated earnings does not support the market’s implied estimate of 11.6% earnings growth. As a result, the ModernGraham valuation model returns an estimate of intrinsic value below the market price at this time, and the company appears to be overvalued by the market.

Be sure to check out previous ModernGraham valuations of Broadcom Corporation (BRCM) for better perspective.

Read the full valuation on Seeking Alpha!

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Disclaimer:  The author did not hold a position in Broadcom Corporation (BRCM) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.


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