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

Quick verdict

AVGO Holdings, Inc. (AVGO) and CRM Holdings, Inc. (CRM) appeal to different investors. On our six-factor framework, AVGO scores 4 and CRM scores 2. AVGO looks cheaper on the multiples that matter, while AVGO grows faster and CRM earns higher returns on capital. Overall, AVGO edges this comparison, but the right pick depends on whether you prioritise value, growth, income or balance-sheet safety.

2-year relative performance

At-a-glance comparison

Business model and revenue mix

AVGO Holdings, Inc. operates in Credit Services (Financial Services), while CRM Holdings, Inc. sits in Oil & Gas Integrated (Energy). 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 1.51 for CRM, meaning CRM 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 36.07 and 6.35 for CRM. Price-to-sales is 9.76 vs 4.31, and free-cash-flow yield is 4.6% vs 3.0%. 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 CRM has delivered 15.0% revenue and 13.0% 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, CRM is stronger. AVGO posts a 35.1% operating margin, 23.1% return on equity and 8.1% return on invested capital. CRM posts 28.4%, 36.4% and 29.9% 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

CRM has the safer balance sheet. AVGO carries net-debt/EBITDA of 3.11x with a current ratio of 0.83, versus -1.37x and 1.70 for CRM. 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 85.7% for CRM; on a three-year annualised basis it is 19.0% vs 23.9%. AVGO yields 0.0% and CRM yields 0.0%. 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 AVGO for its higher shareholder yield, while investors who prize quality-at-a-reasonable-price will favour CRM 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: AVGO
• Quality: CRM

Frequently asked questions

Is AVGO or CRM the better buy right now?

Neither is universally "better." AVGO scores 4 and CRM scores 2 on our six-factor framework. AVGO is cheaper, AVGO grows faster, and CRM is higher quality — so the right pick depends on your objective.

Which stock is cheaper, AVGO or CRM?

AVGO is the cheaper stock across forward P/E (17.33 vs 36.07), EV/EBITDA (17.22 vs 6.35) and price-to-sales (9.76 vs 4.31).

Which has grown faster, AVGO or CRM?

AVGO has the stronger growth profile, with three-year revenue CAGR of 20.9% for AVGO versus 15.0% for CRM.

Which stock pays a bigger dividend?

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

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