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

Zacks Equity Research
In the latest trading session, Cisco Systems (CSCO) closed at $46.59, marking a +0.55% move from the previous day.

Cisco Systems CSCO closed at $46.59 in the latest trading session, marking a +0.55% move from the prior day. This move lagged the S&P 500's daily gain of 0.77%. Elsewhere, the Dow gained 1.01%, while the tech-heavy Nasdaq added 0.91%.

Coming into today, shares of the seller of routers, switches, software and services had gained 6.41% in the past month. In that same time, the Computer and Technology sector gained 0.72%, while the S&P 500 gained 2.11%.

CSCO will be looking to display strength as it nears its next earnings release, which is expected to be November 21, 2018. On that day, CSCO is projected to report earnings of $0.72 per share, which would represent year-over-year growth of 18.03%. Meanwhile, our latest consensus estimate is calling for revenue of $12.78 billion, up 5.33% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2.95 per share and revenue of $51.22 billion, which would represent changes of +13.46% and +3.83%, respectively, from the prior year.

Investors might also notice 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.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 1.39% higher within the past month. CSCO is currently a Zacks Rank #3 (Hold).

Investors should also note CSCO's current valuation metrics, including its Forward P/E ratio of 17.47. This represents a discount compared to its industry's average Forward P/E of 29.37.

It is also worth noting that CSCO currently has a PEG ratio of 2.76. 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. Computer - Networking stocks are, on average, holding a PEG ratio of 2.76 based on yesterday's closing prices.

The Computer - Networking industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 198, which puts it in the bottom 22% 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.

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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