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

Zacks Equity Research

Broadcom Inc. (AVGO) closed the most recent trading day at $315.20, moving -0.73% from the previous trading session. This change lagged the S&P 500's daily gain of 0.31%. At the same time, the Dow added 0.44%, and the tech-heavy Nasdaq gained 0.26%.

Prior to today's trading, shares of the chipmaker had gained 0.47% over the past month. This has lagged the Computer and Technology sector's gain of 4.64% and the S&P 500's gain of 1.18% in that time.

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%. Our most recent consensus estimate is calling for quarterly revenue 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 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 0.43% higher. 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 13.72 right now. This represents a discount compared to its industry's average Forward P/E of 22.51.

Also, we should mention that AVGO has a PEG ratio of 1.28. 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 1.76 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 15, putting it in the top 6% 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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