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Cisco Systems (CSCO) Dips More Than Broader Markets: What You Should Know

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Zacks Equity Research
·3 min read
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Cisco Systems (CSCO) closed the most recent trading day at $45.15, moving -0.46% from the previous trading session. This change lagged the S&P 500's 0.38% loss on the day. At the same time, the Dow lost 0.22%, and the tech-heavy Nasdaq lost 0.12%.

Coming into today, shares of the seller of routers, switches, software and services had gained 1.43% in the past month. In that same time, the Computer and Technology sector gained 4.43%, while the S&P 500 gained 4.12%.

CSCO will be looking to display strength as it nears its next earnings release. On that day, CSCO is projected to report earnings of $0.76 per share, which would represent a year-over-year decline of 1.3%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $11.91 billion, down 0.8% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.17 per share and revenue of $48.76 billion, which would represent changes of -1.25% and -1.09%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for CSCO. Recent revisions tend to reflect the latest 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. 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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. CSCO is currently sporting a Zacks Rank of #2 (Buy).

Looking at its valuation, CSCO is holding a Forward P/E ratio of 14.3. This represents a discount compared to its industry's average Forward P/E of 21.46.

We can also see that CSCO currently has a PEG ratio of 2.29. 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. The Computer - Networking was holding an average PEG ratio of 3 at yesterday's closing price.

The Computer - Networking industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 55, which puts it in the top 22% 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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