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Cisco ETFs in Focus on Q4 Earnings Beat and Weak Outlook
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Tech prime Cisco Systems (CSCO - Free Report) disappointed investors with its fourth-quarter fiscal 2020 results. The networking giant issued a weaker-than-expected outlook and reported a revenue decline. However, it beat on both earnings and revenues.
Earnings of 80 cents per share outpaced the Zacks Consensus Estimate of 74 cents but declined from the year-ago earnings of 83 cents. Revenues declined 9% year over year to $12.15 billion but edged past the consensus mark of $12.09 billion. The weak performance came despite the strength in the company’s software and services business.
Cisco expects revenues to decline 9-11% from the year-ago level, and earnings per share in the range of 69-71 cents for first-quarter fiscal 2021. The Zacks Consensus Estimate for earnings per share is 75 cents while the same for revenues indicates a decline of 6.9% year over year (read: Is It Time to Rotate Out of Tech ETFs?).
The company also laid out a restructuring plan, which includes a voluntary early retirement program and layoffs, beginning this quarter.
The weak results pushed shares of Cisco down by 6% in after-market trade. The stock currently has a Zacks Rank #2 (Buy) and a VGM Score of B. It belongs to a top-ranked industry (top 30%).
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 drags on. Below we have highlighted five of them:
iShares North American Tech-Multimedia Networking ETF
This ETF provides a 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 second spot with 8.3% allocation. The product has accumulated $51.6 million in its asset base while seeing a lower volume of around 7,000 shares a day. It charges 46 bps in annual fees and carries a Zacks ETF Rank #2 (Buy) with a High risk outlook (see: all the Technology ETFs here).
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 $1.3 billion in its asset base and trades in moderate volume of about 99,000 shares per day. The ETF charges 50 bps in annual fees and holds about 89 securities in its basket. Of these firms, CSCO occupies the third position, making up roughly 7.2% of the assets.
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 $2.1 billion in its asset base. The fund charges 60 bps in annual fees and trades in average daily volume of about 452,000 shares. In total, the product holds 44 stocks in its basket with Cisco taking the fifth spot at 5.5% (read: Cybersecurity ETFs Maintain Strength on Solid Q2 Earnings).
Invesco Dynamic Networking ETF
This fund follows the Dynamic Networking Intellidex Index, holding 32 securities in its basket. Of these, Cisco is the seventh firm, accounting for 4.6% share. The fund is relatively unpopular and illiquid in the broad technology space with AUM of $56 million and average daily volume of about 3,000 shares. It charges 63 bps in annual fees and has a Zacks ETF Rank #2 with a High risk outlook.
First Trust Dow Jones Internet Index (FDN - Free Report)
This is one of the most popular and liquid ETFs in the broader tech space with AUM of $9.6 billion and average daily volume of around 523,000 shares. The fund tracks the Dow Jones Internet Composite Index and charges 52 bps in fees per year. Holding 42 stocks in its basket, Cisco occupies the sixth position at 4.6%. The product has a Zacks ETF Rank #2 with a High risk outlook.
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Cisco ETFs in Focus on Q4 Earnings Beat and Weak Outlook
Tech prime Cisco Systems (CSCO - Free Report) disappointed investors with its fourth-quarter fiscal 2020 results. The networking giant issued a weaker-than-expected outlook and reported a revenue decline. However, it beat on both earnings and revenues.
Earnings of 80 cents per share outpaced the Zacks Consensus Estimate of 74 cents but declined from the year-ago earnings of 83 cents. Revenues declined 9% year over year to $12.15 billion but edged past the consensus mark of $12.09 billion. The weak performance came despite the strength in the company’s software and services business.
Cisco expects revenues to decline 9-11% from the year-ago level, and earnings per share in the range of 69-71 cents for first-quarter fiscal 2021. The Zacks Consensus Estimate for earnings per share is 75 cents while the same for revenues indicates a decline of 6.9% year over year (read: Is It Time to Rotate Out of Tech ETFs?).
The company also laid out a restructuring plan, which includes a voluntary early retirement program and layoffs, beginning this quarter.
The weak results pushed shares of Cisco down by 6% in after-market trade. The stock currently has a Zacks Rank #2 (Buy) and a VGM Score of B. It belongs to a top-ranked industry (top 30%).
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 drags on. Below we have highlighted five of them:
iShares North American Tech-Multimedia Networking ETF
This ETF provides a 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 second spot with 8.3% allocation. The product has accumulated $51.6 million in its asset base while seeing a lower volume of around 7,000 shares a day. It charges 46 bps in annual fees and carries a Zacks ETF Rank #2 (Buy) with a High risk outlook (see: all the Technology ETFs here).
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 $1.3 billion in its asset base and trades in moderate volume of about 99,000 shares per day. The ETF charges 50 bps in annual fees and holds about 89 securities in its basket. Of these firms, CSCO occupies the third position, making up roughly 7.2% of the assets.
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 $2.1 billion in its asset base. The fund charges 60 bps in annual fees and trades in average daily volume of about 452,000 shares. In total, the product holds 44 stocks in its basket with Cisco taking the fifth spot at 5.5% (read: Cybersecurity ETFs Maintain Strength on Solid Q2 Earnings).
Invesco Dynamic Networking ETF
This fund follows the Dynamic Networking Intellidex Index, holding 32 securities in its basket. Of these, Cisco is the seventh firm, accounting for 4.6% share. The fund is relatively unpopular and illiquid in the broad technology space with AUM of $56 million and average daily volume of about 3,000 shares. It charges 63 bps in annual fees and has a Zacks ETF Rank #2 with a High risk outlook.
First Trust Dow Jones Internet Index (FDN - Free Report)
This is one of the most popular and liquid ETFs in the broader tech space with AUM of $9.6 billion and average daily volume of around 523,000 shares. The fund tracks the Dow Jones Internet Composite Index and charges 52 bps in fees per year. Holding 42 stocks in its basket, Cisco occupies the sixth position at 4.6%. The product has a Zacks ETF Rank #2 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 >>