Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Broadcom Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 61.5% to -37.1% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 33, DPO 34, DIO 49). At a 9.2% WACC with mid-year discounting, the terminal value (80% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 23.6x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $238.56 per share, suggesting AVGO is overvalued by 23.1% at the current price of $310.22.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 38,425 | 58,535 | 73,127 | 82,366 | 51,765 | 53,059 |
| (−) Net Interest | 6,050 | 9,216 | 11,513 | 12,968 | 8,150 | 8,354 |
| (+) D&A | 498 | 665 | 969 | 1,365 | 1,803 | 1,848 |
| EBITDA | 44,972 | 68,416 | 85,610 | 96,699 | 61,718 | 63,261 |
| (−) Tax | 3,900 | 5,942 | 7,423 | 8,361 | 5,255 | — |
| (−) CapEx | 1,277 | 1,946 | 2,431 | 2,738 | 1,721 | — |
| (−) ΔWC | 2,935 | 5,647 | 4,098 | 2,594 | -8,593 | — |
| Free Cash Flow (FCF) | 36,859 | 54,881 | 71,658 | 83,005 | 63,336 | — |
| Peers' EBITDA Multiple | 23.6x | |||||
| Terminal Value | 1,493,586 | |||||
| WACC / Discount Rate | 9.19% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 35,274 | 48,100 | 57,518 | 61,018 | 42,640 | 962,289 |
| Enterprise Value | 1,206,838 | |||||
| Projection Period | 244,549 | 20.3% | ||||
| Terminal Value | 962,289 | 79.7% | ||||
| (−) Current Net Debt | 48,958 | |||||
| Equity Value | 1,157,880 | |||||
| (÷) Outstanding Shares | 4853M | |||||
| Fair Price | $239 | -23.1% | ||||
| WACC \ EV/EBITDA Exit Multiple | 19.6x | 21.6x | 23.6x | 25.6x | 27.6x |
|---|---|---|---|---|---|
| 7.2% | $223 | $242 | $260 | $279 | $297 |
| 8.2% | $214 | $232 | $249 | $267 | $284 |
| 9.2% | $205 | $222 | $239 | $255 | $272 |
| 10.2% | $196 | $212 | $229 | $245 | $261 |
| 11.2% | $188 | $204 | $219 | $234 | $250 |
Current price: $310.22. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.