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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 $47.48, moving +0.96% from the previous trading session. The stock outpaced the S&P 500's daily gain of 0.37%. Elsewhere, the Dow gained 0.42%, while the tech-heavy Nasdaq added 0.56%.

Coming into today, shares of the seller of routers, switches, software and services had gained 0.96% in the past month. In that same time, the Computer and Technology sector gained 5.93%, while the S&P 500 gained 4.42%.

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. In that report, analysts expect CSCO to post earnings of $0.81 per share. This would mark year-over-year growth of 8%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $13.08 billion, up 0.02% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.34 per share and revenue of $52.83 billion, which would represent changes of +7.74% and +1.79%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for CSCO. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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 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. Over the past month, the Zacks Consensus EPS estimate has moved 0.21% lower. CSCO is currently sporting a Zacks Rank of #4 (Sell).

Looking at its valuation, CSCO is holding a Forward P/E ratio of 14.06. Its industry sports an average Forward P/E of 14.84, so we one might conclude that CSCO is trading at a discount comparatively.

It is also worth noting that CSCO currently has a PEG ratio of 2.07. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Computer - Networking industry currently had an average PEG ratio of 2.16 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 100, which puts it in the top 40% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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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