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

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Cisco Systems (CSCO - Free Report) closed at $47.19 in the latest trading session, marking a +1.7% move from the prior day. The stock outpaced the S&P 500's daily gain of 0.74%. Elsewhere, the Dow gained 0.43%, while the tech-heavy Nasdaq added 1.67%.

Heading into today, shares of the seller of routers, switches, software and services had gained 2.61% over the past month, lagging the Computer and Technology sector's gain of 4.01% and the S&P 500's gain of 5.51% 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. On that day, CSCO is projected to report earnings of $0.74 per share, which would represent a year-over-year decline of 10.84%. Our most recent consensus estimate is calling for quarterly revenue of $12.09 billion, down 9.94% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $3.15 per share and revenue of $49.24 billion. These totals would mark changes of +1.61% and -5.13%, respectively, from last 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 such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. CSCO currently has a Zacks Rank of #2 (Buy).

Digging into valuation, CSCO currently has a Forward P/E ratio of 14.74. This represents a discount compared to its industry's average Forward P/E of 21.49.

Also, we should mention that CSCO has a PEG ratio of 2.73. 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. Computer - Networking stocks are, on average, holding a PEG ratio of 3.13 based on yesterday's closing prices.

The Computer - Networking industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 93, which puts it in the top 37% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

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


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