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

Zacks Equity Research
BancorpSouth (BXS) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

Cisco Systems (CSCO) closed the most recent trading day at $47.28, moving -0.32% from the previous trading session. This move lagged the S&P 500's daily gain of 0.13%. Meanwhile, the Dow gained 0.61%, and the Nasdaq, a tech-heavy index, lost 0.08%.

Coming into today, shares of the seller of routers, switches, software and services had gained 3.67% in the past month. In that same time, the Computer and Technology sector gained 1.4%, while the S&P 500 gained 2.1%.

CSCO will be looking to display strength as it nears its next earnings release, which is expected to be November 21, 2018. The company is expected to report EPS of $0.72, up 18.03% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $12.87 billion, up 6.05% from the year-ago period.

CSCO's full-year Zacks Consensus Estimates are calling for earnings of $2.97 per share and revenue of $51.46 billion. These results would represent year-over-year changes of +14.23% and +4.33%, respectively.

Investors might also notice 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.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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 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. The Zacks Consensus EPS estimate has moved 0.83% higher within the past month. CSCO is currently a Zacks Rank #3 (Hold).

Valuation is also important, so investors should note that CSCO has a Forward P/E ratio of 15.98 right now. For comparison, its industry has an average Forward P/E of 19.15, which means CSCO is trading at a discount to the group.

It is also worth noting that CSCO currently has a PEG ratio of 2.52. 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 1.92 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 231, which puts it in the bottom 9% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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