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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 at $45.83 in the latest trading session, marking a +0.95% move from the prior day. This move lagged the S&P 500's daily gain of 1.39%. At the same time, the Dow added 1.57%, and the tech-heavy Nasdaq gained 1.56%.

Investors will be hoping for strength from CSCO as it approaches its next earnings release, which is expected to be February 9, 2021. The company is expected to report EPS of $0.76, down 1.3% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $11.92 billion, down 0.72% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.18 per share and revenue of $48.84 billion, which would represent changes of -0.93% and -0.93%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for CSCO. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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.

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. The Zacks Consensus EPS estimate remained stagnant within the past month. CSCO is currently sporting a Zacks Rank of #3 (Hold).

Investors should also note CSCO's current valuation metrics, including its Forward P/E ratio of 14.02. Its industry sports an average Forward P/E of 21.15, so we one might conclude that CSCO is trading at a discount comparatively.

It is also worth noting that CSCO currently has a PEG ratio of 2.24. 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. The Computer - Networking was holding an average PEG ratio of 2.6 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 81, putting it in the top 32% 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.

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


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