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

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Zacks Equity Research
·3 min read
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Cisco Systems (CSCO) closed the most recent trading day at $45.11, moving -0.51% from the previous trading session. This move lagged the S&P 500's daily gain of 0.03%. At the same time, the Dow lost 0.04%, and the tech-heavy Nasdaq gained 0.55%.

Prior to today's trading, shares of the seller of routers, switches, software and services had gained 2.17% over the past month. This has lagged the Computer and Technology sector's gain of 5.24% and the S&P 500's gain of 3.99% in that time.

Investors will be hoping for strength from CSCO as it approaches its next earnings release, which is expected to be February 9, 2021. On that day, CSCO is projected to report earnings of $0.76 per share, which would represent a year-over-year decline of 1.3%. Meanwhile, our latest consensus estimate is calling for revenue of $11.91 billion, down 0.8% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.17 per share and revenue of $48.76 billion, which would represent changes of -1.25% and -1.09%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for CSCO. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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, 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 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 14.3. For comparison, its industry has an average Forward P/E of 22.75, which means CSCO is trading at a discount to the group.

We can also see that CSCO currently has a PEG ratio of 2.29. 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. CSCO's industry had an average PEG ratio of 3.16 as of yesterday's close.

The Computer - Networking industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 116, putting it in the top 46% 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.

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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