Broadcom Inc. (AVGO): investment thesis checklist
What a value investor writing down why they own Broadcom Inc. would be relying on, read from its filings: the figures that have carried the business, the lines a reader might set on them, and the published tests it meets today. A list to write against, not a view on the company.
1. The figures the case would rest on
- Return on invested capital: 6.6% in FY2024; between 6.6% and 30.6% over 4 filed years, median 20.8%. Does the thesis need it to stay inside that range?
- Return on equity: 28.4% in FY2025; between -9.2% and 58.7% over 10 filed years, median 19.7%. Does the thesis need it to stay inside that range?
- Free cash flow yield: 1.5% in FY2025; between 1.5% and 8.7% over 10 filed years, median 5.5%. Does the thesis need it to stay inside that range?
- EV to EBIT: 72.36x in FY2025; between 16.01x and 72.36x over 8 filed years, median 37.30x. Does the thesis need it to stay inside that range?
- Price to earnings: 77.49x in FY2025; between 7.76x and 137.33x over 9 filed years, median 46.13x. Does the thesis need it to stay inside that range?
- Gross margin: 67.8% in FY2025; between 44.9% and 68.9% over 10 filed years, median 59.0%. Does the thesis need it to stay inside that range?
- Operating margin: 39.9% in FY2025; between -3.1% and 45.3% over 10 filed years, median 25.4%. Does the thesis need it to stay inside that range?
- Net debt to EBITDA: 1.93x in FY2025; between 1.52x and 7.45x over 8 filed years, median 2.83x. Does the thesis need it to stay inside that range?
- Revenue growth, 5-year CAGR: 21.7% in FY2025; between 11.4% and 52.6% over 10 filed years, median 25.1%. Does the thesis need it to stay inside that range?
- Share count change: 1.6% in FY2025; between -2.8% and 11.8% over 9 filed years, median 1.6%. Does the thesis need it to stay inside that range?
2. What must stay true: guardrails a reader might set
Each line is drafted from Broadcom Inc.'s own current figure, never from a level we think a business should clear, and replayed over its filed years. They are a reader's to keep, edit or drop.
Debt to Equity stays at or below 1.02x
Today 0.82x. Replayed over 8 filed years, it would have broken in 5; most recently FY2023, at 1.65x (10-K, filed 2023-12-14).
Revenue Growth 1Y stays at or above 0%
Today 23.87%. Replayed over 9 filed years, it held in every one.
Dividend Rate stays at or above $2.57
Today $2.60. This indicator depends on inputs (market price, multi-statement composites) whose history is not deep enough to re-derive it with the same formula as the live value, so no honest retro-test exists for it.
3. What would break it
- A filed year in which debt to equity rose above 1.02x.
- A filed year in which revenue growth 1y fell below 0%.
- A filed year in which dividend rate fell below $2.57.
4. The published tests it meets today
Of 30 tests value investors published: 3 met, 26 not met, 1 we could not complete. Counts, never a score.
Meets: Three forensic scores; High return on tangibles; Cash-covered dividend.
What this cannot tell you
What the numbers say today, not the day one stops being true. The reasons are not written down.
An account adds
One email the night a number you wrote down breaks. Silence otherwise.
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How this is computedA computation on accounts filed with the SEC, not a recommendation and not advice. Past filings do not indicate future results. Risk disclaimer.