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

Zacks Equity Research
·3 mins read

Broadcom Inc. (AVGO) closed the most recent trading day at $378.65, moving -0.34% from the previous trading session. This change lagged the S&P 500's daily gain of 0.01%. Meanwhile, the Dow gained 0.39%, and the Nasdaq, a tech-heavy index, lost 0.36%.

Coming into today, shares of the chipmaker had gained 3.83% in the past month. In that same time, the Computer and Technology sector gained 4.31%, while the S&P 500 gained 2.55%.

Investors will be hoping for strength from AVGO as it approaches its next earnings release. The company is expected to report EPS of $6.24, up 15.77% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $6.42 billion, up 11.11% from the year-ago period.

AVGO's full-year Zacks Consensus Estimates are calling for earnings of $22.05 per share and revenue of $23.86 billion. These results would represent year-over-year changes of +3.57% and +5.57%, respectively.

Investors should also note any 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. 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.

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 remained stagnant within the past month. AVGO is currently a Zacks Rank #3 (Hold).

Valuation is also important, so investors should note that AVGO has a Forward P/E ratio of 17.23 right now. Its industry sports an average Forward P/E of 22.91, so we one might conclude that AVGO is trading at a discount comparatively.

Investors should also note that AVGO has a PEG ratio of 1.37 right now. 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 1.78 at yesterday's closing price.

The Electronics - Semiconductors industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 115, which puts it in the top 46% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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