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

Zacks Equity Research

Cisco Systems (CSCO) closed the most recent trading day at $58.05, moving +0.17% from the previous trading session. This move outpaced the S&P 500's daily gain of 0.02%. Meanwhile, the Dow gained 0.1%, and the Nasdaq, a tech-heavy index, added 0.17%.

Prior to today's trading, shares of the seller of routers, switches, software and services had gained 3.17% over the past month. This has lagged the Computer and Technology sector's gain of 6.42% and the S&P 500's gain of 4.82% in that time.

Wall Street will be looking for positivity from CSCO as it approaches its next earnings report date. On that day, CSCO is projected to report earnings of $0.82 per share, which would represent year-over-year growth of 17.14%. Meanwhile, our latest consensus estimate is calling for revenue of $13.39 billion, up 4.23% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $3.08 per share and revenue of $51.86 billion. These totals would mark changes of +18.46% and +5.12%, respectively, from last 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. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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.

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 remained stagnant within the past month. CSCO is currently a Zacks Rank #2 (Buy).

Digging into valuation, CSCO currently has a Forward P/E ratio of 18.83. Its industry sports an average Forward P/E of 18.5, so we one might conclude that CSCO is trading at a premium comparatively.

Also, we should mention that CSCO has a PEG ratio of 2.69. 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. CSCO's industry had an average PEG ratio of 2.69 as of yesterday's close.

The Computer - Networking industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 53, which puts it in the top 21% 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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