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Broadcom Inc. (AVGO) Gains But Lags Market: What You Should Know

Zacks Equity Research

In the latest trading session, Broadcom Inc. (AVGO) closed at $276.06, marking a +0.18% move from the previous day. The stock lagged the S&P 500's daily gain of 0.66%. Meanwhile, the Dow gained 1%, and the Nasdaq, a tech-heavy index, added 0.38%.

Heading into today, shares of the chipmaker had lost 8.01% over the past month, lagging the Computer and Technology sector's loss of 6.46% and the S&P 500's loss of 5.01% in that time.

Investors will be hoping for strength from AVGO as it approaches its next earnings release, which is expected to be September 12, 2019. In that report, analysts expect AVGO to post earnings of $5.09 per share. This would mark year-over-year growth of 2.21%. Our most recent consensus estimate is calling for quarterly revenue of $5.50 billion, up 8.69% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $21.35 per share and revenue of $22.73 billion. These totals would mark changes of +2.55% and +9.03%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for AVGO. These revisions typically reflect the latest short-term business trends, which can change frequently. 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. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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 has moved 1.18% lower within the past month. AVGO is currently sporting a Zacks Rank of #4 (Sell).

Investors should also note AVGO's current valuation metrics, including its Forward P/E ratio of 12.91. This valuation marks a discount compared to its industry's average Forward P/E of 18.49.

Also, we should mention that AVGO has a PEG ratio of 1.09. 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. Electronics - Semiconductors stocks are, on average, holding a PEG ratio of 2.01 based on yesterday's closing prices.

The Electronics - Semiconductors industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 90, putting it in the top 36% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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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