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Cisco Systems, Inc. (CSCO - Analyst Report) is set to report second quarter 2013 results on Feb 13. Last quarter it posted a 7.32% 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 third quarter were above the year-ago comparable period and better than management guidance due to the ramp up of several important products, and strength in the Data Center and Wireless business.

The company’s focus on new products resulted in continued market share gains and margin expansion in the last quarter. Order growth was quite encouraging and the trend is reflective of Cisco’s superior strategy and innovation.

The company’s restructuring activities to expand its operations in certain strategic areas including cloud computing and pursuance of growth opportunities in international markets could be potential catalysts going forward. However, we believe the intense competition in the company's core businesses of routers and switches remain a matter of concern.

Earnings Whispers?

The Zacks Consensus Estimate for the second quarter stands at 43 cents while that for fiscal 2013 stands at $1.76.

Cisco has beaten estimates in all of the last four quarters, with a trailing four-quarter average positive surprise of 6.98%.

Estimate revisions have been minimal, with only one downward estimate revision in the past 60 days. As a result, the Zacks Consensus Estimate has remained unchanged for the second quarter as well as for fiscal 2013 over the last 60 days. Over the last 90 days, however, the Zacks Consensus Estimate has gone up by around 2.4% and 2.3% for the second quarter and 2013, respectively.

However, the stock carries a Zacks Rank #4 (Sell). 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 astock 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, consider other stocks instead like: 

Autodesk Inc. (ADSK - Analyst Report), a Zacks Rank #2 (Buy) with an ESP of +15.79%.

TiVo Inc. (TIVO - Analyst Report), a Zacks Rank #2 (Buy) with an ESP of +8.33%.

Scientific Games Corporation (SGMS - Analyst Report), a Zacks Rank #3 (Hold) with an ESP of +33.33%.

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