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Broadcom Inc. (AVGO) Outpaces Stock Market Gains: What You Should Know

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Zacks Equity Research
·3 min read
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In the latest trading session, Broadcom Inc. (AVGO) closed at $451.74, marking a +1.58% move from the previous day. This change outpaced the S&P 500's 0.98% gain on the day. At the same time, the Dow added 0.99%, and the tech-heavy Nasdaq gained 0.5%.

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 $6.55 per share. This would mark year-over-year growth of 24.76%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $6.61 billion, up 12.81% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $26.28 per share and revenue of $26.36 billion, which would represent changes of +18.59% and +10.36%, 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 such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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.

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. Over the past month, the Zacks Consensus EPS estimate has moved 0.29% higher. AVGO is currently sporting a Zacks Rank of #2 (Buy).

Investors should also note AVGO's current valuation metrics, including its Forward P/E ratio of 17.65. This valuation marks a discount compared to its industry's average Forward P/E of 22.97.

We can also see that AVGO currently has a PEG ratio of 1.37. 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. Electronics - Semiconductors stocks are, on average, holding a PEG ratio of 1.51 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 98, putting it in the top 39% 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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