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

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In the latest trading session, Cisco Systems (CSCO - Free Report) closed at $51.93, marking a +0.27% move from the previous day. The stock lagged the S&P 500's daily gain of 0.93%.

Heading into today, shares of the seller of routers, switches, software and services had gained 5.07% over the past month, lagging the Computer and Technology sector's gain of 8.56% and the S&P 500's gain of 5.84% in that time.

CSCO will be looking to display strength as it nears its next earnings release, which is expected to be May 19, 2021. The company is expected to report EPS of $0.82, up 3.8% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $12.58 billion, up 4.96% from the year-ago period.

CSCO's full-year Zacks Consensus Estimates are calling for earnings of $3.22 per share and revenue of $49.16 billion. These results would represent year-over-year changes of +0.31% and -0.29%, respectively.

Any recent changes to analyst estimates for CSCO should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for 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.

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 0.05% higher within the past month. CSCO currently has a Zacks Rank of #2 (Buy).

In terms of valuation, CSCO is currently trading at a Forward P/E ratio of 16.41. For comparison, its industry has an average Forward P/E of 18.15, which means CSCO is trading at a discount to the group.

Meanwhile, CSCO's PEG ratio is currently 2.63. 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. CSCO's industry had an average PEG ratio of 2.63 as of yesterday's close.

The Computer - Networking industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 200, which puts it in the bottom 22% 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.

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