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

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Cisco Systems (CSCO) closed the most recent trading day at $46.86, moving +0.9% from the previous trading session. This change outpaced the S&P 500's 0.18% gain on the day. Meanwhile, the Dow gained 0.14%, 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 4.13% over the past month. This has was narrower than the Computer and Technology sector's loss of 7.12% and the S&P 500's loss of 6.19% in that time.

CSCO will be looking to display strength as it nears its next earnings release, which is expected to be February 13, 2019. The company is expected to report EPS of $0.72, up 14.29% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $12.38 billion, up 4.14% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $3.02 per share and revenue of $51.45 billion. These totals would mark changes of +16.15% and +4.29%, respectively, from last year.

Any recent changes to analyst estimates for CSCO should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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, 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. Within the past 30 days, our consensus EPS projection has moved 0.94% higher. CSCO currently has a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that CSCO has a Forward P/E ratio of 15.4 right now. Its industry sports an average Forward P/E of 19.14, so we one might conclude that CSCO is trading at a discount comparatively.

Meanwhile, CSCO's PEG ratio is currently 2.43. 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. The Computer - Networking was holding an average PEG ratio of 2.17 at yesterday's closing price.

The Computer - Networking industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 101, which puts it in the top 39% 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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