Broadcom Inc. (AVGO) Gains But Lags Market: What You Should Know

Broadcom Inc. (AVGO) closed at $268.45 in the latest trading session, marking a +1.37% move from the prior day. The stock lagged the S&P 500's daily gain of 1.47%. Meanwhile, the Dow gained 1.51%, and the Nasdaq, a tech-heavy index, added 1.11%.

Prior to today's trading, shares of the chipmaker had gained 8.9% over the past month. This has lagged the Computer and Technology sector's gain of 13.35% and the S&P 500's gain of 16.09% in that time.

Investors will be hoping for strength from AVGO as it approaches its next earnings release. On that day, AVGO is projected to report earnings of $5.02 per share, which would represent a year-over-year decline of 3.65%. Meanwhile, our latest consensus estimate is calling for revenue of $5.70 billion, up 3.33% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $21.23 per share and revenue of $23.54 billion. These totals would mark changes of -0.28% and +4.16%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for AVGO. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for 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 has moved 3.58% lower within the past month. AVGO is holding a Zacks Rank of #3 (Hold) right now.

Valuation is also important, so investors should note that AVGO has a Forward P/E ratio of 12.47 right now. For comparison, its industry has an average Forward P/E of 17.23, which means AVGO is trading at a discount to the group.

Also, we should mention that AVGO has a PEG ratio of 1.08. 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. Electronics - Semiconductors stocks are, on average, holding a PEG ratio of 2.19 based on yesterday's closing prices.

The Electronics - Semiconductors industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 52, putting it in the top 21% 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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