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Cisco (CSCO) Looks Bright Post Q4 Earnings: Should You Hold?
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Cisco Systems (CSCO - Free Report) has been a favorite with investors, courtesy of its rising share price and strong fundamentals. We suggest you to retain the stock in your portfolio at the moment as it looks promising and is poised to carry the momentum ahead. This Zacks Rank #3 (Hold) stock has an estimated long-term earnings growth rate of 6.33%.
The company’s shares have gained 49.5% year over year, outperforming the industry’s 46.2% rally.
What’s Going in Cisco’s Favor?
Cisco delivered fourth-quarter fiscal 2018 non-GAAP earnings of 70 cents per share which came ahead of the Zacks Consensus Estimate by a penny. Further, the figure rose 14.7% from the year-ago quarter.
Revenues increased 6% year over year to $12.844 billion and surpassed the Zacks Consensus Estimate of $12.763 billion. Acquisitions contributed 90 basis points (bps) to revenue growth in the reported quarter.
Strength witnessed in the company’s Security and Applications segments drove year-over-year growth. Order strength and improving traction of the subscription-based model were other tailwinds.
Infrastructure Platforms revenues grew 7% year over year in the last reported quarter.
The increase was primarily owing to robust growth across switching, wireless and data center business. Switching revenues witnessed strong growth across campus and data center. Adoption of new campus switch, Cat9K, was impressive.
Further, wireless revenues grew on the back of company’s Wave 2 offerings and Meraki solution. Robust demand for the HyperFlex data-center solution drove data center’s double-digit growth.
Collaborations & Acquisitions: Key catalysts
Cisco has continued to expand through strategic investments, acquisitions, and other key initiatives.
The company recently announced a new partnership with Alphabet Inc. (GOOGL - Free Report) . The integration was aimed to automate responses in its centers by leveraging data and intelligence from AI.
The company recently closed the acquisition of Accompany for $270 million. The newly acquired company is set to join Collaboration Technology Group (“CTG”) of Cisco. Accompany’s robust enterprise AI capabilities will reinforce Cisco’s collaboration portfolio.
The company also announced it plans to acquire Burlingame, CA-based July Systems. The private company provides cloud-based mobile application platform. The tech giant aims to conclude the buyout in first quarter of fiscal 2019. Per the press release, July Systems team will join the company’s Enterprise Networking Group.
The company also displayed interest in buying Duo Security. This private company leads the market in trusted access and MFA technologies. It aids enterprises to defend against breaches through its effective cloud-based Trusted Access product suite. The buyout is expected to close in the first quarter of fiscal 2019.
Cisco’s current client portfolio already includes big names such as Intel (INTC - Free Report) , Microsoft (MSFT - Free Report) , Oracle, Apple, and Alphabet, to name a few.
Positive Earnings Surprise History
Cisco’ has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in the trailing four quarters, recording a positive average earnings surprise of 2.86%.
Our Take
With Webex Meetings, Webex Devices and Webex Teams yielding results, we believe Cisco is well poised to capitalize on the emerging AI-based enterprise applications.
We believe that company’s expanding footprint in the rapidly growing security market holds promise. Security solutions of Cisco are likely to witness traction, going forward. The company’s extended partnerships with the likes of Aon, Allianz and Rackspace are likely to boost security segment growth.
We expect the aforementioned factors to help the company sustain strong momentum and stay afloat even amid difficult times. Consequently, we suggest investors to hold on to the stock at the moment.
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Image: Bigstock
Cisco (CSCO) Looks Bright Post Q4 Earnings: Should You Hold?
Cisco Systems (CSCO - Free Report) has been a favorite with investors, courtesy of its rising share price and strong fundamentals. We suggest you to retain the stock in your portfolio at the moment as it looks promising and is poised to carry the momentum ahead. This Zacks Rank #3 (Hold) stock has an estimated long-term earnings growth rate of 6.33%.
The company’s shares have gained 49.5% year over year, outperforming the industry’s 46.2% rally.
What’s Going in Cisco’s Favor?
Cisco delivered fourth-quarter fiscal 2018 non-GAAP earnings of 70 cents per share which came ahead of the Zacks Consensus Estimate by a penny. Further, the figure rose 14.7% from the year-ago quarter.
Revenues increased 6% year over year to $12.844 billion and surpassed the Zacks Consensus Estimate of $12.763 billion. Acquisitions contributed 90 basis points (bps) to revenue growth in the reported quarter.
Strength witnessed in the company’s Security and Applications segments drove year-over-year growth. Order strength and improving traction of the subscription-based model were other tailwinds.
Infrastructure Platforms revenues grew 7% year over year in the last reported quarter.
The increase was primarily owing to robust growth across switching, wireless and data center business. Switching revenues witnessed strong growth across campus and data center. Adoption of new campus switch, Cat9K, was impressive.
Further, wireless revenues grew on the back of company’s Wave 2 offerings and Meraki solution. Robust demand for the HyperFlex data-center solution drove data center’s double-digit growth.
Collaborations & Acquisitions: Key catalysts
Cisco has continued to expand through strategic investments, acquisitions, and other key initiatives.
The company recently announced a new partnership with Alphabet Inc. (GOOGL - Free Report) . The integration was aimed to automate responses in its centers by leveraging data and intelligence from AI.
The company recently closed the acquisition of Accompany for $270 million. The newly acquired company is set to join Collaboration Technology Group (“CTG”) of Cisco. Accompany’s robust enterprise AI capabilities will reinforce Cisco’s collaboration portfolio.
The company also announced it plans to acquire Burlingame, CA-based July Systems. The private company provides cloud-based mobile application platform. The tech giant aims to conclude the buyout in first quarter of fiscal 2019. Per the press release, July Systems team will join the company’s Enterprise Networking Group.
The company also displayed interest in buying Duo Security. This private company leads the market in trusted access and MFA technologies. It aids enterprises to defend against breaches through its effective cloud-based Trusted Access product suite. The buyout is expected to close in the first quarter of fiscal 2019.
Cisco’s current client portfolio already includes big names such as Intel (INTC - Free Report) , Microsoft (MSFT - Free Report) , Oracle, Apple, and Alphabet, to name a few.
Positive Earnings Surprise History
Cisco’ has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in the trailing four quarters, recording a positive average earnings surprise of 2.86%.
Our Take
With Webex Meetings, Webex Devices and Webex Teams yielding results, we believe Cisco is well poised to capitalize on the emerging AI-based enterprise applications.
We believe that company’s expanding footprint in the rapidly growing security market holds promise. Security solutions of Cisco are likely to witness traction, going forward. The company’s extended partnerships with the likes of Aon, Allianz and Rackspace are likely to boost security segment growth.
We expect the aforementioned factors to help the company sustain strong momentum and stay afloat even amid difficult times. Consequently, we suggest investors to hold on to the stock at the moment.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Looking for Stocks with Skyrocketing Upside?
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Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>