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

Zacks Equity Research
·3 min read

Broadcom Inc. (AVGO) closed the most recent trading day at $380.62, moving -0.07% from the previous trading session. This change lagged the S&P 500's 0.03% loss on the day. Elsewhere, the Dow lost 0.24%, while the tech-heavy Nasdaq added 0.04%.

Coming into today, shares of the chipmaker had gained 2.02% in the past month. In that same time, the Computer and Technology sector gained 6.07%, while the S&P 500 gained 3.1%.

Investors will be hoping for strength from AVGO as it approaches its next earnings release. The company is expected to report EPS of $6.24, up 15.77% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $6.42 billion, up 11.11% from the year-ago period.

Investors might also notice recent changes to analyst estimates for AVGO. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. AVGO currently has a Zacks Rank of #3 (Hold).

Digging into valuation, AVGO currently has a Forward P/E ratio of 15.06. For comparison, its industry has an average Forward P/E of 24.97, which means AVGO is trading at a discount to the group.

Also, we should mention that AVGO has a PEG ratio of 1.19. 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. AVGO's industry had an average PEG ratio of 1.92 as of yesterday's close.

The Electronics - Semiconductors industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 74, putting it in the top 30% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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Zacks Investment Research