Back to top

Image: Bigstock

Why Broadcom Inc. (AVGO) Outpaced the Stock Market Today

Read MoreHide Full Article

Broadcom Inc. (AVGO - Free Report) closed the latest trading day at $225.29, indicating a +0.44% change from the previous session's end. The stock outperformed the S&P 500, which registered a daily gain of 0.16%. Elsewhere, the Dow saw an upswing of 0.86%, while the tech-heavy Nasdaq depreciated by 0.38%.

The chipmaker's stock has dropped by 0.22% in the past month, exceeding the Computer and Technology sector's loss of 1.29% and the S&P 500's loss of 2.2%.

Analysts and investors alike will be keeping a close eye on the performance of Broadcom Inc. in its upcoming earnings disclosure. It is anticipated that the company will report an EPS of $1.50, marking a 36.36% rise compared to the same quarter of the previous year. At the same time, our most recent consensus estimate is projecting a revenue of $14.62 billion, reflecting a 22.23% rise from the equivalent quarter last year.

For the full year, the Zacks Consensus Estimates are projecting earnings of $6.30 per share and revenue of $61 billion, which would represent changes of +29.36% and +18.28%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for Broadcom Inc. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, upbeat changes in estimates indicate analysts' favorable outlook on the company's business health and profitability.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system.

The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has shifted 4.45% upward. Broadcom Inc. currently has a Zacks Rank of #2 (Buy).

In terms of valuation, Broadcom Inc. is currently trading at a Forward P/E ratio of 35.59. This indicates a premium in contrast to its industry's Forward P/E of 26.8.

We can additionally observe that AVGO currently boasts a PEG ratio of 2. 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. The average PEG ratio for the Electronics - Semiconductors industry stood at 2.12 at the close of the market yesterday.

The Electronics - Semiconductors industry is part of the Computer and Technology sector. Currently, this industry holds a Zacks Industry Rank of 137, positioning it in the bottom 46% of all 250+ industries.

The Zacks Industry Rank assesses the vigor of our specific industry groups by computing the average Zacks Rank of the individual stocks incorporated in 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 use Zacks.com to monitor all these stock-influencing metrics, and more, throughout the forthcoming trading sessions.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Broadcom Inc. (AVGO) - free report >>

Published in