Back to top

Image: Bigstock

Here's Why Cisco Systems (CSCO) Fell More Than Broader Market

Read MoreHide Full Article

Cisco Systems (CSCO - Free Report) closed the most recent trading day at $113.64, moving -1.24% from the previous trading session. The stock trailed the S&P 500, which registered a daily loss of 1.11%. On the other hand, the Dow registered a loss of 0.09%, and the technology-centric Nasdaq decreased by 1.88%.

The seller of routers, switches, software and services's shares have seen an increase of 4.54% over the last month, surpassing the Computer and Technology sector's gain of 3.49% and the S&P 500's gain of 2.06%.

The upcoming earnings release of Cisco Systems will be of great interest to investors. The company's earnings per share (EPS) are projected to be $1.33, reflecting a 33% increase from the same quarter last year. At the same time, our most recent consensus estimate is projecting a revenue of $18.09 billion, reflecting a 21.54% rise from the equivalent quarter last year.

For the annual period, the Zacks Consensus Estimates anticipate earnings of $5.11 per share and a revenue of $73.03 billion, signifying shifts of +18.01% and +15.33%, respectively, from the last 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 such, positive estimate revisions reflect analyst optimism about the business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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 moved 0.05% higher. Cisco Systems is holding a Zacks Rank of #2 (Buy) right now.

Looking at its valuation, Cisco Systems is holding a Forward P/E ratio of 22.51. This expresses a discount compared to the average Forward P/E of 23.02 of its industry.

It is also worth noting that CSCO currently has a PEG ratio of 2.07. 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 Computer - Networking industry had an average PEG ratio of 1.48 as trading concluded yesterday.

The Computer - Networking industry is part of the Computer and Technology sector. This industry, currently bearing a Zacks Industry Rank of 97, finds itself in the top 40% echelons of all 250+ industries.

The Zacks Industry Rank is ordered from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Ensure to harness Zacks.com to stay updated with all these stock-shifting metrics, among others, in the next trading sessions.

Published in