Third-quarter earnings season is pretty much over, but there are a few stragglers still announcing results. Shares of Avago Technologies Ltd (AVGO) are up sharply after the chip-maker blew analysts’ estimates out of the water for the fiscal fourth quarter and lifted its first-quarter outlook.
If you haven’t already heard of it, here’s the scoop on Avago Technologies. Based in Singapore, Avago Technologies develops and supplies analog semiconductor devices for over 40,000 customers in wireless communications, wired infrastructure and industrial markets.
While AVGO went public just five years ago, it has a long history. For three decades, Avago Technologies was a part of Hewlett-Packard Company (HPQ), and then Avago was spun off with the whole HP semiconductor business as part of Agilent Technologies Inc (A). During this time, Avago assembled a team of over 1,000 design and product engineers and developed an extensive portfolio of intellectual property plans.
Today, Avago Technologies operates design centers in Asia, Europe and the U.S as well as manufacturing facilities primarily in Asia. About 85% of Avago Technologies’ sales come from outside the U.S., and AVGO stock is a clear beneficiary of global growth.
The benefits of global growth were clearly evident in Avago Technologies’ latest earnings report. For the fourth quarter, AVGO stock posted adjusted earnings per share of $1.99 on $1.59 billion in revenue, which translated to 115% annual sales growth. Analysts were looking for $1.68 EPS on $1.55 billion in sales. So, Avago posted an 18% earnings surprise and a 2.6% sales beat.
Looking ahead to the fiscal first quarter, analysts remain optimistic. Avago is expected to post a whopping 113% sales growth and 91% earnings growth. AVGO is an “A-rated strong buy” and ranks towards the top of all semiconductor companies.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
