Third-quarter earnings season is all but over, but there are a few stragglers that are still announcing results. As I write this shares of Avago Technologies Ltd. (AVGO) are up sharply after the chipmaker 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 it was a part of Hewlett-Packard, and then it was spun off with the whole HP semiconductor business as part of Agilent Technologies. 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 operates design centers in Asia, Europe and the U.S and manufacturing facilities primarily in Asia. About 85% of its sales come from outside the U.S. and the company is a clear beneficiary of global growth.
That was made clear in Avago’s latest earnings report. For the fourth quarter the firm posted adjusted earnings per share of $1.99 on $1.59 billion in revenue. This 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. The company 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 my semiconductor list.