Broadcom Fourth Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component Broadcom (NASDAQ:BRCM) will unveil its latest earnings tomorrow, Tuesday, January 29, 2013. Broadcom manufactures semiconductors for wired and wireless communications.

Broadcom Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average estimate of analysts is for net income of 52 cents per share, a rise of 15.6% from the company’s actual earnings for the same quarter a year ago. During the past three months, the average estimate has moved down from 55 cents. Between one and three months ago, the average estimate moved down. It has been unchanged at 52 cents during the last month. Analysts are projecting profit to rise by 9.2% compared to last year’s $2.01.

Past Earnings Performance: Last quarter, the company beat estimates by 2 cents, coming in at profit of 58 cents a share versus the estimate of net income of 56 cents a share. It marked the fourth straight quarter of beating estimates.

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A Look Back: In the third quarter, profit fell 18.5% to $220 million (38 cents a share) from $270 million (48 cents a share) the year earlier, but exceeded analyst expectations. Revenue rose 8.7% to $2.13 billion from $1.96 billion.

Here’s how Broadcom traded following its last earnings report 3 months ago and leading up to its upcoming earnings report this week:

brcm

Wall St. Revenue Expectations: On average, analysts predict $2.07 billion in revenue this quarter, a rise of 13.7% from the year-ago quarter. Analysts are forecasting total revenue of $7.98 billion for the year, a rise of 8% from last year’s revenue of $7.39 billion.

Stock Price Performance: Between November 23, 2012 and January 23, 2013, the stock price had risen $3.16 (10%), from $31.58 to $34.74. The stock price saw one of its best stretches over the last year between July 24, 2012 and July 31, 2012, when shares rose for six straight days, increasing 10.1% (+$3.11) over that span. It saw one of its worst periods between July 3, 2012 and July 12, 2012 when shares fell for seven straight days, dropping 8.8% (-$2.99) over that span.

Key Stats:

On the top line, the company is looking to build on three-straight revenue increases heading into this earnings announcement. Revenue increased 0.6% in the first quarter and 9.7% in the second quarter before climbing again in the third quarter.

The company is trying to stem some negative momentum heading into this earnings announcement. Profit has dropped by a year-over-year average of 23.3% over the past four quarters.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 2.58 last quarter. Having a ratio above 2:1 is usually considered a good indicator of a company’s liquidity and ability to meet creditor demands. The company improved this liquidity measure from 2.53 in the second quarter to the last quarter driven in part by an increase in current assets. Current assets increased 13.3% to $3.72 billion while liabilities rose by 11.4% to $1.44 billion.

Analyst Ratings: With 34 analysts rating the stock a buy, none rating it a sell and four rating the stock a hold, there are indications of a bullish stance by analysts.

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(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)