Broadcom DCF Analysis Indicates 36% Overvaluation With $221.17 Intrinsic Value
Broadcom's earnings-based DCF model yields an intrinsic value of $221.17 per share, implying a margin of safety of -35.95%, indicating the shares are modestly overvalued. The traditional free cash flow DCF model estimates intrinsic value at $185.59 per share, reflecting a margin of safety of -62.01%.
1. Earnings-Based DCF Valuation
The DCF calculator applies EPS without NRI of $7.27, a discount rate of 11%, a 10-year growth stage at 19.6% and a 10-year terminal growth rate of 4%. The present value of the growth stage sums to 112.13 and the terminal stage to 109.04, resulting in an intrinsic value of $221.17 per share and a -35.95% margin of safety.
2. Free Cash Flow DCF Valuation
Using trailing twelve-month free cash flow per share, the traditional DCF model yields an intrinsic value of $185.59 per share. This valuation reflects a -62.01% margin of safety, indicating a more pronounced overvaluation compared to the earnings-based model.