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

Zacks Equity Research

Broadcom Inc. (AVGO) closed at $301.74 in the latest trading session, marking a +0.27% move from the prior day. The stock outpaced the S&P 500's daily loss of 0.16%. Elsewhere, the Dow gained 0.11%, while the tech-heavy Nasdaq lost 0.44%.

Coming into today, shares of the chipmaker had gained 5.32% in the past month. In that same time, the Computer and Technology sector gained 6.51%, while the S&P 500 gained 4%.

AVGO will be looking to display strength as it nears its next earnings release. In that report, analysts expect AVGO to post earnings of $5.10 per share. This would mark year-over-year growth of 2.41%. Our most recent consensus estimate is calling for quarterly revenue of $5.50 billion, up 8.69% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $21.36 per share and revenue of $22.61 billion, which would represent changes of +2.59% and +8.46%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for AVGO. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for 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.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 0.76% higher within the past month. AVGO is currently sporting a Zacks Rank of #3 (Hold).

Looking at its valuation, AVGO is holding a Forward P/E ratio of 14.09. For comparison, its industry has an average Forward P/E of 19.6, which means AVGO is trading at a discount to the group.

Meanwhile, AVGO's PEG ratio is currently 1.19. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. AVGO's industry had an average PEG ratio of 1.8 as of yesterday's close.

The Electronics - Semiconductors industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 56, which puts 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.

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


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