Broadcom vs Cisco Systems Which Is More Favorable?

Broadcom and Cisco Systems are two major players in the technology and networking industry, both offering a range of products and services for companies around the world. As companies that cater to similar markets, investors often compare the performance of their stocks to determine which presents a better investment opportunity. Broadcom has seen consistent growth in recent years, while Cisco Systems has faced challenges in adapting to changing market trends. Understanding the strengths and weaknesses of each company is crucial for investors looking to make informed decisions about their stock portfolios.

Broadcom or Cisco Systems?

When comparing Broadcom and Cisco Systems, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Broadcom and Cisco Systems.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Broadcom has a dividend yield of 1.47%, while Cisco Systems has a dividend yield of 2.71%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Broadcom reports a 5-year dividend growth of -13.53% year and a payout ratio of 181.24%. On the other hand, Cisco Systems reports a 5-year dividend growth of 3.90% year and a payout ratio of 61.86%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Broadcom P/E ratio at 163.74 and Cisco Systems's P/E ratio at 22.83. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Broadcom P/B ratio is 12.71 while Cisco Systems's P/B ratio is 5.18.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Broadcom has seen a 5-year revenue growth of 0.73%, while Cisco Systems's is 0.37%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Broadcom's ROE at 8.87% and Cisco Systems's ROE at 22.60%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $176.82 for Broadcom and $58.36 for Cisco Systems. Over the past year, Broadcom's prices ranged from $90.31 to $186.42, with a yearly change of 106.42%. Cisco Systems's prices fluctuated between $44.50 and $59.38, with a yearly change of 33.44%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.