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Cisco Systems (CSCO) Gains But Lags Market: What You Should Know

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Cisco Systems (CSCO - Free Report) closed the most recent trading day at $46.97, moving +0.47% from the previous trading session. The stock lagged the S&P 500's daily gain of 0.84%. Elsewhere, the Dow gained 0.03%, while the tech-heavy Nasdaq added 2.51%.

Prior to today's trading, shares of the seller of routers, switches, software and services had gained 2.01% over the past month. This has lagged the Computer and Technology sector's gain of 5.23% and the S&P 500's gain of 3.73% in that time.

CSCO will be looking to display strength as it nears its next earnings release, which is expected to be August 12, 2020. The company is expected to report EPS of $0.74, down 10.84% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $12.09 billion, down 9.94% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.15 per share and revenue of $49.24 billion, which would represent changes of +1.61% and -5.13%, 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. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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 has moved 0.04% higher within the past month. CSCO is currently a Zacks Rank #2 (Buy).

Digging into valuation, CSCO currently has a Forward P/E ratio of 14.86. This valuation marks a discount compared to its industry's average Forward P/E of 19.84.

Investors should also note that CSCO has a PEG ratio of 2.75 right now. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Computer - Networking stocks are, on average, holding a PEG ratio of 3.2 based on yesterday's closing prices.

The Computer - Networking industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 92, putting it in the top 37% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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