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Cisco Systems (CSCO) Gains But Lags Market: What You Should Know

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Zacks Equity Research
·3 min read
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Cisco Systems (CSCO) closed at $51.64 in the latest trading session, marking a +0.53% move from the prior day. This move lagged the S&P 500's daily gain of 1.11%.

Heading into today, shares of the seller of routers, switches, software and services had gained 4.01% over the past month, lagging the Computer and Technology sector's gain of 8.47% and the S&P 500's gain of 4.72% in that time.

CSCO will be looking to display strength as it nears its next earnings release, which is expected to be May 19, 2021. In that report, analysts expect CSCO to post earnings of $0.82 per share. This would mark year-over-year growth of 3.8%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $12.58 billion, up 4.96% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $3.22 per share and revenue of $49.17 billion. These totals would mark changes of +0.31% and -0.26%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for CSCO. 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.

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.

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 0.05% higher within the past month. CSCO currently has a Zacks Rank of #2 (Buy).

Looking at its valuation, CSCO is holding a Forward P/E ratio of 16.04. This valuation marks a discount compared to its industry's average Forward P/E of 18.13.

It is also worth noting that CSCO currently has a PEG ratio of 2.57. 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. Computer - Networking stocks are, on average, holding a PEG ratio of 2.75 based on yesterday's closing prices.

The Computer - Networking industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 215, putting it in the bottom 16% 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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