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

Broadcom Inc. (AVGO) closed the latest trading day at $225.29, indicating a +0.44% change from the previous session’s end. The stock outperformed the S&P 500, which registered a daily gain of 0.16%. Elsewhere, the Dow saw an upswing of 0.86%, while the tech-heavy Nasdaq depreciated by 0.38%.

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The chipmaker’s stock has dropped by 0.22% in the past month, exceeding the Computer and Technology sector’s loss of 1.29% and the S&P 500’s loss of 2.2%.

Analysts and investors alike will be keeping a close eye on the performance of Broadcom Inc. in its upcoming earnings disclosure. It is anticipated that the company will report an EPS of $1.50, marking a 36.36% rise compared to the same quarter of the previous year. At the same time, our most recent consensus estimate is projecting a revenue of $14.62 billion, reflecting a 22.23% rise from the equivalent quarter last year.

For the full year, the Zacks Consensus Estimates are projecting earnings of $6.30 per share and revenue of $61 billion, which would represent changes of +29.36% and +18.28%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for Broadcom Inc. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, upbeat changes in estimates indicate analysts’ favorable outlook on the company’s business health and profitability.

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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, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has shifted 4.45% upward. Broadcom Inc. currently has a Zacks Rank of #2 (Buy).

In terms of valuation, Broadcom Inc. is currently trading at a Forward P/E ratio of 35.59. This indicates a premium in contrast to its industry’s Forward P/E of 26.8.

We can additionally observe that AVGO currently boasts a PEG ratio of 2. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company’s expected earnings growth rate into account. The average PEG ratio for the Electronics – Semiconductors industry stood at 2.12 at the close of the market yesterday.

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