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Cisco Systems (CSCO) Gains But Lags Market: What You Should Know
Cisco Systems (CSCO - Free Report) closed at $48.34 in the latest trading session, marking a +0.75% move from the prior day. The stock lagged the S&P 500's daily gain of 1.1%. At the same time, the Dow added 0.61%, and the tech-heavy Nasdaq gained 6.59%.
Prior to today's trading, shares of the seller of routers, switches, software and services had gained 1.93% over the past month. This has lagged the Computer and Technology sector's gain of 10.59% and the S&P 500's gain of 4.58% in that time.
Investors will be hoping for strength from Cisco Systems as it approaches its next earnings release, which is expected to be February 15, 2023. On that day, Cisco Systems is projected to report earnings of $0.86 per share, which would represent year-over-year growth of 2.38%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $13.43 billion, up 5.61% from the year-ago period.
For the full year, our Zacks Consensus Estimates are projecting earnings of $3.54 per share and revenue of $54.47 billion, which would represent changes of +5.36% and +5.64%, respectively, from the prior year.
It is also important to note the recent changes to analyst estimates for Cisco Systems. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.
Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. Cisco Systems is holding a Zacks Rank of #3 (Hold) right now.
Looking at its valuation, Cisco Systems is holding a Forward P/E ratio of 13.54. Its industry sports an average Forward P/E of 17.67, so we one might conclude that Cisco Systems is trading at a discount comparatively.
We can also see that CSCO currently has a PEG ratio of 2.08. 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 2.08 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 85, putting it in the top 34% 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.