Monday, July 21, 2025
HomeNEWSBroadcom's (NASDAQ:AVGO) five-year earnings growth trails the massive shareholder returns

Broadcom’s (NASDAQ:AVGO) five-year earnings growth trails the massive shareholder returns


For many, the main point of investing in the stock market is to achieve spectacular returns. While the best companies are hard to find, but they can generate massive returns over long periods. To wit, the Broadcom Inc. (NASDAQ:AVGO) share price has soared 827% over five years. And this is just one example of the epic gains achieved by some long term investors. On top of that, the share price is up 70% in about a quarter. Anyone who held for that rewarding ride would probably be keen to talk about it.

Since the stock has added US$42b to its market cap in the past week alone, let’s see if underlying performance has been driving long-term returns.

We’ve found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Over half a decade, Broadcom managed to grow its earnings per share at 37% a year. This EPS growth is slower than the share price growth of 56% per year, over the same period. This suggests that market participants hold the company in higher regard, these days. That’s not necessarily surprising considering the five-year track record of earnings growth. This optimism is visible in its fairly high P/E ratio of 100.65.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

earnings-per-share-growth
NasdaqGS:AVGO Earnings Per Share Growth July 20th 2025

It’s probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. It might be well worthwhile taking a look at our free report on Broadcom’s earnings, revenue and cash flow.

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It’s fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Broadcom the TSR over the last 5 years was 944%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.

RELATED ARTICLES

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Most Popular

Recent Comments