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Cisco Systems (CSCO) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research
ConocoPhillips (COP) closed the most recent trading day at $60.33, moving +0.02% from the previous trading session.

Cisco Systems (CSCO) closed the most recent trading day at $53.94, moving +1.28% from the previous trading session. This change outpaced the S&P 500's 1.09% gain on the day. At the same time, the Dow added 0.84%, and the tech-heavy Nasdaq gained 1.42%.

Heading into today, shares of the seller of routers, switches, software and services had gained 7.31% over the past month, outpacing the Computer and Technology sector's gain of 4.97% and the S&P 500's gain of 1.18% in that time.

Wall Street will be looking for positivity from CSCO as it approaches its next earnings report date. The company is expected to report EPS of $0.77, up 16.67% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $12.89 billion, up 3.4% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.06 per share and revenue of $51.67 billion, which would represent changes of +17.69% and +4.73%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for CSCO. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection has moved 0.09% higher. CSCO is holding a Zacks Rank of #2 (Buy) right now.

In terms of valuation, CSCO is currently trading at a Forward P/E ratio of 17.42. For comparison, its industry has an average Forward P/E of 17.42, which means CSCO is trading at a no noticeable deviation to the group.

Also, we should mention that CSCO has a PEG ratio of 2.49. 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. Computer - Networking stocks are, on average, holding a PEG ratio of 2.18 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 171, putting it in the bottom 33% 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.

To follow CSCO in the coming trading sessions, be sure to utilize Zacks.com.


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