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Broadcom Inc. (AVGO) Gains As Market Dips: What You Should Know

Zacks Equity Research

In the latest trading session, Broadcom Inc. (AVGO) closed at $285.08, marking a +0.33% move from the previous day. The stock outpaced the S&P 500's daily loss of 0.65%. Meanwhile, the Dow lost 0.42%, and the Nasdaq, a tech-heavy index, lost 0.46%.

Prior to today's trading, shares of the chipmaker had gained 2.19% over the past month. This has lagged the Computer and Technology sector's gain of 5.63% and the S&P 500's gain of 4.11% in that time.

Investors will be hoping for strength from AVGO as it approaches its next earnings release. In that report, analysts expect AVGO to post earnings of $5.10 per share. This would mark year-over-year growth of 2.41%. Meanwhile, our latest consensus estimate is calling for revenue of $5.50 billion, up 8.69% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $21.36 per share and revenue of $22.61 billion. These totals would mark changes of +2.59% and +8.46%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for AVGO. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for 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. Over the past month, the Zacks Consensus EPS estimate has moved 0.76% higher. AVGO is currently sporting a Zacks Rank of #3 (Hold).

Investors should also note AVGO's current valuation metrics, including its Forward P/E ratio of 13.3. This valuation marks a discount compared to its industry's average Forward P/E of 17.53.

Meanwhile, AVGO's PEG ratio is currently 1.12. 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 industry currently had an average PEG ratio of 1.66 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 56, putting it in the top 22% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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