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Cisco Systems (CSCO) Gains But Lags Market: What You Should Know

Zacks Equity Research

In the latest trading session, Cisco Systems (CSCO) closed at $46.36, marking a +0.67% move from the previous day. This change lagged the S&P 500's 1% gain on the day.

Heading into today, shares of the seller of routers, switches, software and services had lost 7.83% over the past month, lagging the Computer and Technology sector's loss of 0.45% and the S&P 500's loss of 1.22% in that time.

CSCO will be looking to display strength as it nears its next earnings release, which is expected to be November 13, 2019. In that report, analysts expect CSCO to post earnings of $0.81 per share. This would mark year-over-year growth of 8%. Our most recent consensus estimate is calling for quarterly revenue of $13.08 billion, up 0.02% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.35 per share and revenue of $52.85 billion, which would represent changes of +8.06% and +1.83%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for CSCO. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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.

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. Within the past 30 days, our consensus EPS projection has moved 0.8% lower. CSCO is currently a Zacks Rank #3 (Hold).

Valuation is also important, so investors should note that CSCO has a Forward P/E ratio of 13.75 right now. This valuation marks a discount compared to its industry's average Forward P/E of 14.72.

Also, we should mention that CSCO has a PEG ratio of 2.02. 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 2.06 based on yesterday's closing prices.

The Computer - Networking industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 25, which puts it in the top 10% 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.


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