What is Broadcom Forward Rate of Return (Yacktman) %?
Yacktman defines forward rate of return as the normalized free cash flow yield plus real growth plus inflation. Broadcom's forward rate of return for was 4.03%.
The historical rank and industry rank for Broadcom's Forward Rate of Return (Yacktman) % or its related term are showing as below:
BRCM's Forward Rate of Return (Yacktman) % is not ranked *
in the Semiconductors industry.
Industry Median: 13.19 * Ranked among companies with meaningful Forward Rate of Return (Yacktman) % only.
Unlike the Earnings Yield %, the Forward Rate of Return uses the normalized Free Cash Flow of the past seven years, and considers growth. The forward rate of return can be thought of as the return that investors buying the stock today can expect from it in the future.
Broadcom Forward Rate of Return (Yacktman) % Historical Data
The historical data trend for Broadcom's Forward Rate of Return (Yacktman) % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
* Premium members only.
Broadcom Forward Rate of Return (Yacktman) % Chart
Competitive Comparison of Broadcom's Forward Rate of Return (Yacktman) %
For the Semiconductors subindustry, Broadcom's Forward Rate of Return (Yacktman) %, along with its competitors' market caps and Forward Rate of Return (Yacktman) % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Broadcom's Forward Rate of Return (Yacktman) % Distribution in the Semiconductors Industry
For the Semiconductors industry and Technology sector, Broadcom's Forward Rate of Return (Yacktman) % distribution charts can be found below:
* The bar in red indicates where Broadcom's Forward Rate of Return (Yacktman) % falls into.
Broadcom Forward Rate of Return (Yacktman) % Calculation
Forward Rate of Return is a concept that Don Yacktman uses in his investment approach. Yacktman explained the forward rate of return concept in detail in his interview with GuruFocus. Yacktman defines forward rate of return as the normalized free cash flow yield plus real growth plus inflation. He said in the interview (March 2012, when the S&P 500 was at about 1400):
If the business is stable, this calculation is fairly straightforward. For instance, on the S&P 500 we would normalize earnings. We would then calculate what percentage of those earnings are not reinvested in the underlying businesses and are therefore free. Historically, for the S&P 500, this has been just under 50% of earnings. Currently, we expect the S&P to earn about 70 on a normalized basis, a number which is far below reported earnings due to our adjusting for record high profit margins. $70 X ½ / 1400 gives you a normalized free cash flow yield of approximately 2.5%.
The historical real growth rate of the S&P 500 (companies) is about 1.5%. Assuming an inflation rate of 2.5%, the forward rate of return on an investment in the S&P 500 is about 6.5% today (2.5% free cash flow yield plus 1.5% real growth plus 2.5% inflation).
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Broadcom (NAS:BRCM) Forward Rate of Return (Yacktman) % Explanation
Unlike the Earnings Yield, the Forward Rate of Return uses the normalized Free Cash Flow of the past five years, and considers growth. The forward rate of return can be thought of as the return that investors buying the stock today can expect from it in the future.
For the growth part of the Forward Rate of Return calculation, GuruFocus uses the 5-year average growth rate of EBITDA per share as the growth rate, and the growth rate is always capped at 20%. For the Free Cash Flow we use per share data averaged over five years. The reason we use five years is to make it comparable to the growth rate.
Be Aware
In the Forward Rate of Return calculation, the growth rate is added directly to today's free cash flow yield. Therefore the calculation is reliable only if the company can grow at the same rate in the future as it did in the past. Investors should pay close attention to this when researching growth stocks. A more accurate measurement for return is Return on Capital.
Broadcom Forward Rate of Return (Yacktman) % Related Terms
Thank you for viewing the detailed overview of Broadcom's Forward Rate of Return (Yacktman) % provided by GuruFocus.com. Please click on the following links to see related term pages.
Broadcom Corp was incorporated in California in August 16, 1991. The Company is provider of semiconductors for wired and wireless communications. It provides a portfolio of SoCs that seamlessly deliver voice, video, data and multimedia connectivity in the home, office and mobile environments. Its business segments include Broadband and Connectivity; and Infrastructure and Networking. The solutions in Broadband and Connectivity segment include set-top box solutions, broadband modem solutions, connectivity solutions, and a range of other technologies. Customer products incorporating its solutions in Broadband and Connectivity segment include set-top boxes, or STBs, central office broadband access equipment, residential gateways, stand-alone broadband access modems, and a range of consumer devices, including smartphones and tablets, wearable devices, PCs, laptops, access points, and others. It offers complete platform solutions for cable, satellite, Internet Protocol, over-the-top and terrestrial STBs. Its solutions in Infrastructure and Networking segment include Ethernet switches and PHYs, which includes switches and fabrics; copper and optical transceivers; backplane and optical front-end physical layer devices; processors (including multicore processors); and other Infrastructure and Networking technologies (including knowledge-based processors, VoIP solutions, microwave backhaul solutions and radio head digital front ends). It also offers a family of Ethernet controllers. Customer products incorporating its solutions in Infrastructure and Networking segment include service provider metro equipment; edge and core routers, wireless infrastructure and wireless access points; switches and routers; servers and workstations; network interface cards; LAN on motherboard applications; optical networks and dense wave division multiplexing applications; security appliances; storage controllers; microwave links for wireless backhaul; cellular remote radio heads; automobile Ethernet networks; point-of-sale equipment; and other embedded SoC subsystems. Its customers shipping wired and/or wireless communications equipment and devices incorporating its products include Alcatel-Lucent, Apple, Arris, Cisco, Huawei Technologies, Humax, Pace, Samsung, Technicolor, ZTE. Its trademark includes Broadcom and BroadR-Reach. The Company's competitors include Intel Corporation, Marvell Technology Group Ltd., Mediatek Inc., Qualcomm Incorporation, and STMicroelectronics NV with respect to Broadband and Connectivity segment; and Cavium, Inc., Freescale Semiconductor,Ltd., Intel Corporation, Marvell Technology Group Ltd., and Mellanox with respect to Infrastructure and Networking segment. The Company's production is subject to environmental rules and regulations.
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