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

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Zacks Equity Research
·3 min read
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Broadcom Inc. (AVGO) closed the most recent trading day at $445.85, moving -1.38% from the previous trading session. This change lagged the S&P 500's 0.72% loss on the day. Elsewhere, the Dow lost 0.57%, while the tech-heavy Nasdaq lost 0.87%.

Prior to today's trading, shares of the chipmaker had gained 6.09% over the past month. This has outpaced the Computer and Technology sector's gain of 4.37% and the S&P 500's gain of 4.69% in that time.

Wall Street will be looking for positivity from AVGO as it approaches its next earnings report date. The company is expected to report EPS of $6.54, up 24.57% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $6.61 billion, up 12.81% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $26.26 per share and revenue of $26.36 billion. These totals would mark changes of +18.5% and +10.36%, respectively, from last year.

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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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. Within the past 30 days, our consensus EPS projection remained stagnant. AVGO is currently a Zacks Rank #2 (Buy).

Looking at its valuation, AVGO is holding a Forward P/E ratio of 17.22. This represents a discount compared to its industry's average Forward P/E of 23.42.

It is also worth noting that AVGO currently has a PEG ratio of 1.34. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Electronics - Semiconductors was holding an average PEG ratio of 1.47 at yesterday's closing price.

The Electronics - Semiconductors industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 107, putting it in the top 42% 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.

To follow AVGO in the coming trading sessions, be sure to utilize Zacks.com.


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