If you're trying to build your earnings season watchlist by looking for stocks setting up in a base ahead of earnings, here's one that fits the bill: Broadcom. The chipmaker says it will report first quarter results on March 3 after the market close. It's trading about 18% below a 677.86 entry. Broadcom stock slid 0.7% to 561.77 Thursday morning in trading on the stock market today before rebounding in the afternoon.
San Jose, Calif.-based Broadcom makes analog semiconductors for a variety of markets. Among them: autos, computers, telecommunications gear and industrial electronics. Broadcom stock rose sharply from its Covid market crash intraday low 155.67 in late March 2020 to an all-time high 677.76 set on Dec. 28 last year.
Broadcom Stock Rising Amid Continued Healthy Profit, Sales Gains
The company recorded 23% earnings growth in its most recent report, to $7.81 per share. EPS have grown, year-over-year, in the mid- to high-20s percent range at least four quarters in a row. Sales last quarter rose to $7.41 billion, continuing a string of mid-teens growth for the past year. A shortage of chips has lifted sales and offset challenges it has getting raw materials because of clogged up supply chains.
Meanwhile, analysts are looking for earnings-per-share growth of 22% for Q1, and 18% growth for the full year. Annual EPS estimates were recently revised higher.
Additionally, among its key ratings, Broadcom stock holds a strong 92 Composite Rating, of a best-possible 99. Its 90 EPS Rating puts it in the top 10% of all companies for recent and long-term profit growth. And it has a B- Accumulation/Distribution Rating, on an A+ to E scale, indicating moderately strong buying of its stock by institutional investors.
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Broadcom earns the No. 6 rank among its peers in the Electronics-Semiconductor Fabless industry group. Alpha & Omega Semiconductor, Monolithic Power Systems and MaxLinear are among the top five highly rated stocks in the group.
Forming A Late-Stage Base
Please note that buying a stock just ahead of earnings can be risky since you typically don't have enough time to build a profit cushion before the latest quarterly numbers come out. Be sure to follow sound buy and sell rules to minimize your exposure.
Additionally, the current Broadcom stock formation is a third-stage consolidation, which involves more risk than a first- or second-stage formation.
Note: Dates for earnings reports are subject to change. Check the company's website for any updates.
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