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Cisco Systems (CSCO) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

In the latest trading session, Cisco Systems (CSCO) closed at $47.17, marking a +0.58% move from the previous day. This move outpaced the S&P 500's daily gain of 0.56%. Meanwhile, the Dow gained 0.49%, and the Nasdaq, a tech-heavy index, added 1.01%.

Heading into today, shares of the seller of routers, switches, software and services had lost 3.95% over the past month, lagging the Computer and Technology sector's gain of 1.92% and the S&P 500's gain of 1.38% in that time.

Wall Street will be looking for positivity from CSCO as it approaches its next earnings report date. This is expected to be November 13, 2019. The company is expected to report EPS of $0.81, up 8% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $13.08 billion, up 0.02% from the prior-year quarter.

CSCO's full-year Zacks Consensus Estimates are calling for earnings of $3.34 per share and revenue of $52.83 billion. These results would represent year-over-year changes of +7.74% and +1.79%, respectively.

Any recent changes to analyst estimates for CSCO should also be noted by investors. 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.

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 0.36% lower within the past month. CSCO is currently a Zacks Rank #4 (Sell).

In terms of valuation, CSCO is currently trading at a Forward P/E ratio of 14.02. This valuation marks a discount compared to its industry's average Forward P/E of 14.92.

Investors should also note that CSCO has a PEG ratio of 2.06 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. Computer - Networking stocks are, on average, holding a PEG ratio of 2.09 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 28, which puts it in the top 11% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow CSCO in the coming trading sessions, be sure to utilize Zacks.com.


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