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

Zacks Equity Research
·3 min read

Broadcom Inc. (AVGO) closed at $380.62 in the latest trading session, marking a +0.01% move from the prior day. This move outpaced the S&P 500's daily loss of 1.16%. Meanwhile, the Dow lost 1.16%, and the Nasdaq, a tech-heavy index, lost 0.82%.

Coming into today, shares of the chipmaker had gained 0.96% in the past month. In that same time, the Computer and Technology sector gained 2.54%, while the S&P 500 gained 3.87%.

AVGO will be looking to display strength as it nears its next earnings release, which is expected to be December 10, 2020. On that day, AVGO is projected to report earnings of $6.24 per share, which would represent year-over-year growth of 15.77%. Our most recent consensus estimate is calling for quarterly revenue of $6.42 billion, up 11.11% from the year-ago period.

Investors should also note any recent changes to analyst estimates for AVGO. These revisions help to show the ever-changing nature of near-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 remained stagnant within the past month. AVGO currently has a Zacks Rank of #3 (Hold).

Looking at its valuation, AVGO is holding a Forward P/E ratio of 15.05. For comparison, its industry has an average Forward P/E of 27.09, which means AVGO is trading at a discount to the group.

It is also worth noting that AVGO currently has a PEG ratio of 1.19. 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 1.55 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 87, putting it in the top 35% 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.

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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