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Broadcom Inc. (AVGO) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research

Broadcom Inc. (AVGO) closed at $288.48 in the latest trading session, marking a -0.63% move from the prior day. This move lagged the S&P 500's daily loss of 0.2%. Meanwhile, the Dow lost 0.08%, and the Nasdaq, a tech-heavy index, lost 0.3%.

Heading into today, shares of the chipmaker had gained 0.52% over the past month, lagging the Computer and Technology sector's gain of 0.91% and outpacing the S&P 500's loss of 0.25% in that time.

AVGO will be looking to display strength as it nears its next earnings release. In that report, analysts expect AVGO to post earnings of $5.37 per share. This would mark a year-over-year decline of 8.21%. Meanwhile, our latest consensus estimate is calling for revenue of $5.76 billion, up 5.72% from the prior-year quarter.

AVGO's full-year Zacks Consensus Estimates are calling for earnings of $21.28 per share and revenue of $22.55 billion. These results would represent year-over-year changes of +2.21% and +8.17%, respectively.

Any recent changes to analyst estimates for AVGO should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. AVGO is holding a Zacks Rank of #3 (Hold) right now.

Investors should also note AVGO's current valuation metrics, including its Forward P/E ratio of 13.64. For comparison, its industry has an average Forward P/E of 19.8, which means AVGO is trading at a discount to the group.

We can also see that AVGO currently has a PEG ratio of 1.15. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Electronics - Semiconductors was holding an average PEG ratio of 2.12 at yesterday's closing price.

The Electronics - Semiconductors industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 91, which puts it in the top 36% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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