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

Zacks Equity Research
·3 mins read

Cisco Systems (CSCO) closed the most recent trading day at $39.39, moving +0.84% from the previous trading session. The stock outpaced the S&P 500's daily gain of 0.83%. Meanwhile, the Dow gained 1.2%, and the Nasdaq, a tech-heavy index, added 0.74%.

Prior to today's trading, shares of the seller of routers, switches, software and services had lost 7.07% over the past month. This has lagged the Computer and Technology sector's loss of 5.53% and the S&P 500's loss of 4.83% in that time.

Wall Street will be looking for positivity from CSCO as it approaches its next earnings report date. The company is expected to report EPS of $0.71, down 15.48% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $11.88 billion, down 9.74% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $3.11 per share and revenue of $48.25 billion. These totals would mark changes of -3.12% and -2.14%, respectively, from last year.

Any recent changes to analyst estimates for CSCO should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. 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. 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 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. Within the past 30 days, our consensus EPS projection remained stagnant. CSCO is currently a Zacks Rank #3 (Hold).

Investors should also note CSCO's current valuation metrics, including its Forward P/E ratio of 12.56. For comparison, its industry has an average Forward P/E of 15.29, which means CSCO is trading at a discount to the group.

We can also see that CSCO currently has a PEG ratio of 1.88. 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 2.72 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 122, putting it in the top 49% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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