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Broadcom Inc. (AVGO) Stock Sinks As Market Gains: What You Should Know

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Broadcom Inc. (AVGO - Free Report) closed the most recent trading day at $229.89, moving -1.14% from the previous trading session. This move lagged the S&P 500's daily gain of 0.04%. Elsewhere, the Dow gained 0.11%, while the tech-heavy Nasdaq lost 0.23%.

Coming into today, shares of the chipmaker had gained 12.18% in the past month. In that same time, the Computer and Technology sector gained 1.5%, while the S&P 500 gained 2.16%.

Investors will be hoping for strength from AVGO as it approaches its next earnings release, which is expected to be December 5, 2018. On that day, AVGO is projected to report earnings of $5.57 per share, which would represent year-over-year growth of 21.35%. Our most recent consensus estimate is calling for quarterly revenue of $5.41 billion, up 11.62% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $20.52 per share and revenue of $20.81 billion, which would represent changes of +28.09% and +17.99%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for AVGO. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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 3.28% higher within the past month. AVGO is holding a Zacks Rank of #2 (Buy) right now.

In terms of valuation, AVGO is currently trading at a Forward P/E ratio of 11.33. Its industry sports an average Forward P/E of 18.15, so we one might conclude that AVGO is trading at a discount comparatively.

It is also worth noting that AVGO currently has a PEG ratio of 0.85. 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. The Electronics - Semiconductors industry currently had an average PEG ratio of 1.83 as of yesterday's close.

The Electronics - Semiconductors industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 76, putting it in the top 30% of all 250+ industries.

The Zacks Industry Rank includes is listed in order 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.

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




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