AVGO Holdings, Inc. (AVGO)vs MU Holdings, Inc. (MU)

Quick verdict

AVGO Holdings, Inc. (AVGO) and MU Holdings, Inc. (MU) appeal to different investors. On our six-factor framework, AVGO scores 3 and MU scores 3. AVGO looks cheaper on the multiples that matter, while AVGO grows faster and MU earns higher returns on capital. The two are evenly matched overall, so your priority — value, growth, income or safety — should decide it.

2-year relative performance

At-a-glance comparison

Business model and revenue mix

AVGO Holdings, Inc. operates in Credit Services (Financial Services), while MU Holdings, Inc. sits in Software—Infrastructure (Technology). The two operate in different sectors, so cyclicality and end-market exposure differ — factor that into any portfolio overlap. AVGO carries a beta of 1.30 versus 1.76 for MU, meaning MU has historically been the more volatile of the two.

Valuation

On valuation, AVGO is the cheaper stock. AVGO trades on a forward P/E of 17.33 and EV/EBITDA of 17.22, against 29.96 and 32.42 for MU. Price-to-sales is 9.76 vs 4.11, and free-cash-flow yield is 4.6% vs 5.5%. A higher multiple is only justified if the company can sustain faster growth or wider margins, which is exactly what the next sections test.

Growth profile

AVGO is the faster grower. AVGO has compounded revenue at 20.9% over three years with EPS growth of 29.3%, while MU has delivered 20.5% revenue and 13.3% EPS growth. Growth like this is the single biggest driver of long-term returns, but it also tends to come with a richer valuation, so it must be weighed against the multiples above.

Profitability and quality

On profitability and quality, MU is stronger. AVGO posts a 35.1% operating margin, 23.1% return on equity and 8.1% return on invested capital. MU posts 44.1%, 24.8% and 22.2% respectively. Return on invested capital above roughly 15% is a hallmark of a durable competitive advantage, so this metric deserves particular attention.

Balance-sheet risk

MU has the safer balance sheet. AVGO carries net-debt/EBITDA of 3.11x with a current ratio of 0.83, versus -0.74x and 1.58 for MU. Lower leverage gives a company more room to invest through a downturn and reduces the risk of dilution or distress.

Price performance and shareholder returns

Over the past year AVGO returned 95.6% against 50.4% for MU; on a three-year annualised basis it is 19.0% vs 27.0%. AVGO yields 0.0% and MU yields 0.2%. Past performance never guarantees future results, but the multi-year track record shows how the market has rewarded each business so far.

Which stock fits which investor

For value-oriented investors, AVGO is the better fit on today's multiples. Growth investors will likely prefer AVGO, which is expanding faster. Income investors should lean toward MU for its higher shareholder yield, while investors who prize quality-at-a-reasonable-price will favour MU for its superior returns on capital. This is a comparison of facts, not a recommendation — your time horizon, risk tolerance and existing holdings should drive the final decision.

• Value: AVGO
• Growth: AVGO
• Income: MU
• Quality: MU

Frequently asked questions

Is AVGO or MU the better buy right now?

Neither is universally "better." AVGO scores 3 and MU scores 3 on our six-factor framework. AVGO is cheaper, AVGO grows faster, and MU is higher quality — so the right pick depends on your objective.

Which stock is cheaper, AVGO or MU?

AVGO is the cheaper stock across forward P/E (17.33 vs 29.96), EV/EBITDA (17.22 vs 32.42) and price-to-sales (9.76 vs 4.11).

Which has grown faster, AVGO or MU?

AVGO has the stronger growth profile, with three-year revenue CAGR of 20.9% for AVGO versus 20.5% for MU.

Which stock pays a bigger dividend?

AVGO yields 0.0% and MU yields 0.2%, so MU is the stronger income choice.

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