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Cisco Reports Revenue Decline Again: ETFs in Focus
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Tech prime Cisco Systems (CSCO - Free Report) failed to cheer investors following its second-quarter fiscal 2021 results. Though the networking giant beat on both earnings and revenues and offered an upbeat revenue outlook, its revenues declined for the fifth consecutive quarter on a year-over-year basis.
Earnings of 71 cents per share outpaced the Zacks Consensus Estimate of 68 cents but declined from the year-ago earnings of 77 cents. Revenues declined to $11.96 billion from $12.01 billion in the year-ago period but edged past the consensus mark of $11.92 billion.
The year-over-year decline came from a big decline in enterprise sales which were partly offset by the strength in the company’s software and services business. Notably, the remote working trend boosted demand for the company's video conferencing platform Webex, virtual private network AnyConnect and cybersecurity products (see: all the Technology ETFs here).
Cisco is looking for modest revenue growth in the next quarter, which would be its first growth since November 2019. It expects revenues to increase 3.5-5.5% year over year, and earnings per share in the range of 80-82 cents for first-quarter fiscal 2021. The Zacks Consensus Estimate for earnings per share is 82 cents while the same for revenues indicates growth of 3%.
Following the earnings, Cisco shares were down by more than 5% in after market trade. The stock currently has a Zacks Rank #3 (Hold) and a VGM Score of B. It belongs to a top-ranked industry (top 40%).
ETFs to Watch
Given this, ETFs with the largest allocation to this network giant will be in focus. Investors should closely monitor the movement of these funds and grab the opportunity whenever it arises or avoid it if the stock slides. Below, we have highlighted five of them:
First Trust NASDAQ Technology Dividend Index Fund (TDIV - Free Report)
This fund provides exposure to dividend payers in the technology sector by tracking the Nasdaq Technology Dividend Index. The product has amassed about $1.4 billion in its asset base and trades in a moderate volume of about 84,000 shares per day. The ETF charges 50 bps in annual fees and holds about 80 securities in its basket. Of these firms, CSCO occupies the third position, making up roughly 7.9% of the assets (read: 5 Market-Beating Dividend ETFs of 2020).
iShares North American Tech-Multimedia Networking ETF
This ETF provides concentrated exposure to domestic multimedia and networking securities by tracking the S&P North American Technology-Multimedia Networking Index. Holding 22 securities in its basket, Cisco takes the fourth spot with 7.5% allocation. The product has accumulated $76.3 million in its asset base while seeing a good volume of around 84,000 shares a day. It charges 46 bps in annual fees and carries a Zacks ETF Rank #2 (Buy) with a High risk outlook.
This ETF follows the Nasdaq CTA Cybersecurity Index, which measures the performance of companies engaged in the cyber security segment of the technology and industrials sectors. It has accumulated $3.5 billion in its asset base. The fund charges 60 bps in annual fees and trades in an average daily volume of about 806,000 shares. In total, the product holds 41 stocks in its basket with Cisco taking the third spot at 5.5% (read: Cybersecurity Stocks & ETFs Soar after Massive Hack).
This fund follows the Dow Jones U.S. Select Telecommunications Index and offers exposure to 45 American companies that provide telephone and Internet products, services and technologies. Cisco occupies the fourth position with 4.9% of the assets. The ETF has AUM of $404.8 million and trades in an average daily volumes of 243,000 shares. It charges 42 bps in annual fees and has a Zacks ETF Rank 2 with a Medium risk outlook.
Invesco Dynamic Networking ETF
This fund follows the Dynamic Networking Intellidex Index, holding 31 securities in its basket. Of these, Cisco is the fifth firm, accounting for 4.5% share. The fund is relatively unpopular and illiquid in the broad technology space with AUM of $47.5 million and an average daily volume of about 6,000 shares. It charges 63 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a High risk outlook.
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Cisco Reports Revenue Decline Again: ETFs in Focus
Tech prime Cisco Systems (CSCO - Free Report) failed to cheer investors following its second-quarter fiscal 2021 results. Though the networking giant beat on both earnings and revenues and offered an upbeat revenue outlook, its revenues declined for the fifth consecutive quarter on a year-over-year basis.
Earnings of 71 cents per share outpaced the Zacks Consensus Estimate of 68 cents but declined from the year-ago earnings of 77 cents. Revenues declined to $11.96 billion from $12.01 billion in the year-ago period but edged past the consensus mark of $11.92 billion.
The year-over-year decline came from a big decline in enterprise sales which were partly offset by the strength in the company’s software and services business. Notably, the remote working trend boosted demand for the company's video conferencing platform Webex, virtual private network AnyConnect and cybersecurity products (see: all the Technology ETFs here).
Cisco is looking for modest revenue growth in the next quarter, which would be its first growth since November 2019. It expects revenues to increase 3.5-5.5% year over year, and earnings per share in the range of 80-82 cents for first-quarter fiscal 2021. The Zacks Consensus Estimate for earnings per share is 82 cents while the same for revenues indicates growth of 3%.
Following the earnings, Cisco shares were down by more than 5% in after market trade. The stock currently has a Zacks Rank #3 (Hold) and a VGM Score of B. It belongs to a top-ranked industry (top 40%).
ETFs to Watch
Given this, ETFs with the largest allocation to this network giant will be in focus. Investors should closely monitor the movement of these funds and grab the opportunity whenever it arises or avoid it if the stock slides. Below, we have highlighted five of them:
First Trust NASDAQ Technology Dividend Index Fund (TDIV - Free Report)
This fund provides exposure to dividend payers in the technology sector by tracking the Nasdaq Technology Dividend Index. The product has amassed about $1.4 billion in its asset base and trades in a moderate volume of about 84,000 shares per day. The ETF charges 50 bps in annual fees and holds about 80 securities in its basket. Of these firms, CSCO occupies the third position, making up roughly 7.9% of the assets (read: 5 Market-Beating Dividend ETFs of 2020).
iShares North American Tech-Multimedia Networking ETF
This ETF provides concentrated exposure to domestic multimedia and networking securities by tracking the S&P North American Technology-Multimedia Networking Index. Holding 22 securities in its basket, Cisco takes the fourth spot with 7.5% allocation. The product has accumulated $76.3 million in its asset base while seeing a good volume of around 84,000 shares a day. It charges 46 bps in annual fees and carries a Zacks ETF Rank #2 (Buy) with a High risk outlook.
First Trust Nasdaq Cybersecurity ETF (CIBR - Free Report)
This ETF follows the Nasdaq CTA Cybersecurity Index, which measures the performance of companies engaged in the cyber security segment of the technology and industrials sectors. It has accumulated $3.5 billion in its asset base. The fund charges 60 bps in annual fees and trades in an average daily volume of about 806,000 shares. In total, the product holds 41 stocks in its basket with Cisco taking the third spot at 5.5% (read: Cybersecurity Stocks & ETFs Soar after Massive Hack).
iShares U.S. Telecommunications ETF (IYZ - Free Report)
This fund follows the Dow Jones U.S. Select Telecommunications Index and offers exposure to 45 American companies that provide telephone and Internet products, services and technologies. Cisco occupies the fourth position with 4.9% of the assets. The ETF has AUM of $404.8 million and trades in an average daily volumes of 243,000 shares. It charges 42 bps in annual fees and has a Zacks ETF Rank 2 with a Medium risk outlook.
Invesco Dynamic Networking ETF
This fund follows the Dynamic Networking Intellidex Index, holding 31 securities in its basket. Of these, Cisco is the fifth firm, accounting for 4.5% share. The fund is relatively unpopular and illiquid in the broad technology space with AUM of $47.5 million and an average daily volume of about 6,000 shares. It charges 63 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a High risk outlook.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>