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

Cisco Systems (CSCO) closed the most recent trading day at $47.16, moving +0.13% from the previous trading session. This change lagged the S&P 500's 0.72% gain on the day. At the same time, the Dow added 0.89%, and the tech-heavy Nasdaq gained 1.47%.

Coming into today, shares of the seller of routers, switches, software and services had gained 3.22% in the past month. In that same time, the Computer and Technology sector gained 7.08%, while the S&P 500 gained 5.85%.

CSCO will be looking to display strength as it nears its next earnings release, which is expected to be August 12, 2020. The company is expected to report EPS of $0.73, down 12.05% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $12.09 billion, down 9.94% from the prior-year quarter.

Any recent changes to analyst estimates for CSCO should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

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 remained stagnant within the past month. CSCO is currently sporting a Zacks Rank of #2 (Buy).

Valuation is also important, so investors should note that CSCO has a Forward P/E ratio of 14.96 right now. This represents a discount compared to its industry's average Forward P/E of 16.67.

Also, we should mention that CSCO has a PEG ratio of 2.77. 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. CSCO's industry had an average PEG ratio of 3.01 as of yesterday's close.

The Computer - Networking industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 71, which puts it in the top 28% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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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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