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

Zacks Equity Research

In the latest trading session, Broadcom Inc. (AVGO) closed at $320.16, marking a +1.9% move from the previous day. This move outpaced the S&P 500's daily gain of 0.17%. Elsewhere, the Dow 0%, while the tech-heavy Nasdaq added 0.11%.

Coming into today, shares of the chipmaker had gained 4.32% in the past month. In that same time, the Computer and Technology sector gained 4.62%, while the S&P 500 gained 2.78%.

Wall Street will be looking for positivity from AVGO as it approaches its next earnings report date. In that report, analysts expect AVGO to post earnings of $5.22 per share. This would mark a year-over-year decline of 5.95%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $5.93 billion, up 2.36% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $23.14 per share and revenue of $25.02 billion, which would represent changes of +8.69% and +10.72%, respectively, from the prior year.

It is also important to note the 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. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.43% 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 13.58. Its industry sports an average Forward P/E of 22.38, so we one might conclude that AVGO is trading at a discount comparatively.

It is also worth noting that AVGO currently has a PEG ratio of 1.27. 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 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 16, putting it in the top 7% 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.

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


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