Broadcom Inc. (AVGO) Outperforms Broader Market: What You Need to Know

The latest trading session saw Broadcom Inc. (AVGO) ending at $1,332.75, denoting a +1.68% adjustment from its last day's close. This move outpaced the S&P 500's daily gain of 0.03%. Meanwhile, the Dow experienced a rise of 0.41%, and the technology-dominated Nasdaq saw an increase of 0.12%.

The the stock of chipmaker has risen by 5.94% in the past month, leading the Computer and Technology sector's loss of 0.55% and the S&P 500's loss of 0.9%.

Market participants will be closely following the financial results of Broadcom Inc. in its upcoming release. The company is forecasted to report an EPS of $10.70, showcasing a 3.68% upward movement from the corresponding quarter of the prior year. In the meantime, our current consensus estimate forecasts the revenue to be $11.96 billion, indicating a 36.91% growth compared to the corresponding quarter of the prior year.

For the full year, the Zacks Consensus Estimates are projecting earnings of $46.94 per share and revenue of $50.37 billion, which would represent changes of +11.1% and +40.63%, respectively, from the prior year.

It's also important for investors to be aware of any recent modifications to analyst estimates for Broadcom Inc. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, upbeat changes in estimates indicate analysts' favorable outlook on the company's business health and profitability.

Our research demonstrates that these adjustments in estimates directly associate with imminent stock price performance. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable 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 2.31% lower within the past month. Broadcom Inc. presently features a Zacks Rank of #4 (Sell).

In terms of valuation, Broadcom Inc. is currently trading at a Forward P/E ratio of 27.93. For comparison, its industry has an average Forward P/E of 33.48, which means Broadcom Inc. is trading at a discount to the group.

Investors should also note that AVGO has a PEG ratio of 2.04 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. As the market closed yesterday, the Electronics - Semiconductors industry was having an average PEG ratio of 2.9.

The Electronics - Semiconductors industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 152, putting it in the bottom 40% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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