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

Zacks Equity Research
·3 min read

Cisco Systems (CSCO) closed at $35.69 in the latest trading session, marking a -0.06% move from the prior day. This move lagged the S&P 500's daily gain of 1.2%. At the same time, the Dow added 0.53%, and the tech-heavy Nasdaq gained 1.64%.

Coming into today, shares of the seller of routers, switches, software and services had lost 9.34% in the past month. In that same time, the Computer and Technology sector lost 1.12%, while the S&P 500 lost 2.23%.

Wall Street will be looking for positivity from CSCO as it approaches its next earnings report date. This is expected to be November 12, 2020. In that report, analysts expect CSCO to post earnings of $0.71 per share. This would mark a year-over-year decline of 15.48%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $11.88 billion, down 9.74% from the year-ago period.

CSCO's full-year Zacks Consensus Estimates are calling for earnings of $3.11 per share and revenue of $48.25 billion. These results would represent year-over-year changes of -3.12% and -2.14%, respectively.

It is also important to note the recent changes to analyst estimates for CSCO. These recent revisions tend to reflect the evolving nature of short-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. 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 sporting a Zacks Rank of #3 (Hold).

Looking at its valuation, CSCO is holding a Forward P/E ratio of 11.48. This represents a discount compared to its industry's average Forward P/E of 12.99.

Also, we should mention that CSCO has a PEG ratio of 1.72. 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 was holding an average PEG ratio of 2.18 at yesterday's closing price.

The Computer - Networking industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 178, putting it in the bottom 30% 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.

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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