Broadcom Inc. (AVGO) delivered strong quarterly results, exceeding analysts’ expectations for both earnings and revenue. The company reported earnings of $1.24 per share, surpassing the Zacks Consensus Estimate of $1.20 per share, representing an earnings surprise of 3.33%. This performance also outpaced the previous year’s earnings of $1.05 per share. Broadcom’s revenue for the quarter reached $13.07 billion, exceeding the Zacks Consensus Estimate by 1.31% and surpassing the previous year’s revenue of $8.88 billion.
While these results demonstrate a positive performance, investors are naturally curious about the future trajectory of Broadcom’s stock. While there are no easy answers to this question, one reliable measure investors can consider is the company’s earnings outlook. This includes analyzing current consensus earnings expectations and how these expectations have evolved recently. Research suggests a strong correlation between short-term stock movements and trends in earnings estimate revisions.
To assess this, investors can either track these revisions independently or utilize a trusted rating tool like the Zacks Rank. This tool has a proven track record of leveraging the power of earnings estimate revisions. Ahead of the recent earnings release, the estimate revision trend for Broadcom was mixed. While the direction and magnitude of estimate revisions could change following the latest earnings report, the current status translates to a Zacks Rank #3 (Hold) for the stock. This indicates that the stock is expected to perform in line with the broader market in the near future. It will be interesting to observe how estimates for upcoming quarters and the current fiscal year change in the coming days.
Current consensus EPS estimates stand at $1.37 on $14.02 billion in revenues for the upcoming quarter and $4.72 on $51.37 billion in revenues for the current fiscal year. However, investors should be mindful of the broader industry outlook, as it can significantly impact the stock’s performance. The Zacks Industry Rank currently places Electronics – Semiconductors in the bottom 45% of the 250+ Zacks industries. Research has shown that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
In the broader Zacks Computer and Technology sector, Jabil (JBL) is another company expected to report results for the quarter ended August 2024. This electronics manufacturer is projected to post quarterly earnings of $2.24 per share, representing a year-over-year decline of -8.6%. The consensus EPS estimate for the quarter has been revised 1.8% lower over the past 30 days to the current level. Jabil’s revenues are anticipated to be $6.57 billion, down 22.3% from the year-ago quarter.
