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Cisco Systems, Inc. (CSCO - Analyst Report) is set to report fourth quarter 2013 results on Aug 14. Last quarter, it posted a 4% positive surprise. Let’s see how things are shaping up for this announcement.

Growth Factors this Past Quarter

Though Cisco was affected by the sluggish macro environment, the company’s sales growth rates in the quarter were above the year-ago comparable period and the management guidance, attributable to the ramp of several important products and strength in the Data Center, Service Provider Video and Wireless lines of business. Order growth was quite encouraging and the trend reflects Cisco’s superior strategy and innovation.

However, unfavorable mix and increased expenditure on new products contained margin growth.

Cisco provided an encouraging outlook for the fourth quarter, with revenues expected to increase in the range of 4% to 7% on a year-over-year basis. Cisco expects non-GAAP earnings to be in the range of 50-52 cents per share, above the Zacks Consensus Estimate of 47 cents. GAAP earnings are expected to be in the range of 7 to 10 cents.

Earnings Whispers?

The Zacks Consensus Estimate for the fourth quarter stands at 47 cents per share while that for fiscal 2013 stands at $1.83.

Cisco has beaten estimates in all of the last four quarters, with a trailing four-quarter average positive surprise of 6.52%.

There have been no estimate revisions in the last 30 days. As a result, the Zacks Consensus Estimate for the fourth quarter as well as for 2013 has remained unchanged during this time period. The stock carries a Zacks Rank #2 (Buy).

We caution against stocks with Zacks Rank #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Our model states that a stock needs to have both a positive earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1, #2 or #3 to beat earnings estimates. You could, therefore, also consider other stocks like: 

Rambus Inc (RMBS - Snapshot Report), with an earnings ESP of +42.86% and a Zacks Rank #1 (Strong Buy)

Micron Tech (MU - Analyst Report), with Earnings ESP of +28.57% and a Zacks Rank #2 (Buy)

InvenSense Inc. (INVN - Snapshot Report) with an earnings ESP of +5.26% and a Zacks Rank #3(Hold)

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