Why Broadcom Inc. (AVGO) Outpaced the Stock Market Today

In the latest close session, Broadcom Inc. (AVGO) was up +1.17% at $344.29. The stock outpaced the S&P 500’s daily gain of 0.58%. At the same time, the Dow added 0.31%, and the tech-heavy Nasdaq gained 0.89%.

Shares of the chipmaker have appreciated by 0.29% over the course of the past month, outperforming the Computer and Technology sector’s loss of 0.5%, and the S&P 500’s gain of 0.16%.

The investment community will be paying close attention to the earnings performance of Broadcom Inc. in its upcoming release. In that report, analysts expect Broadcom Inc. to post earnings of $1.87 per share. This would mark year-over-year growth of 31.69%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $17.5 billion, up 24.49% from the year-ago period.

For the full year, the Zacks Consensus Estimates project earnings of $6.73 per share and a revenue of $63.36 billion, demonstrating changes of +38.19% and +22.85%, respectively, from the preceding year.

Any recent changes to analyst estimates for Broadcom Inc. should also be noted by investors. Such recent modifications usually signify the changing landscape of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the business outlook.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system.

The Zacks Rank system, running from #1 (Strong Buy) to #5 (Strong Sell), holds an admirable track record of superior performance, independently audited, with #1 stocks contributing an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.11% lower. Broadcom Inc. is currently a Zacks Rank #3 (Hold).

Looking at its valuation, Broadcom Inc. is holding a Forward P/E ratio of 50.58. This signifies a premium in comparison to the average Forward P/E of 39.29 for its industry.

Investors should also note that AVGO has a PEG ratio of 1.54 right now. Comparable to the widely accepted P/E ratio, the PEG ratio also accounts for the company’s projected earnings growth. The Electronics – Semiconductors industry had an average PEG ratio of 1.92 as trading concluded yesterday.

The Electronics – Semiconductors industry is part of the Computer and Technology sector. Currently, this industry holds a Zacks Industry Rank of 71, positioning it in the top 29% of all 250+ industries.