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Cisco (CSCO) Up 1.5% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Cisco Systems (CSCO - Free Report) . Shares have added about 1.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Cisco due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Cisco Q2 Earnings Top Estimates, Revenues Down Y/Y
Cisco Systems reported second-quarter fiscal 2024 non-GAAP earnings of 87 cents per share, which beat the Zacks Consensus Estimate by 8.62%. The bottom line fell 1.1% year over year.
Revenues decreased 6% year over year to $12.79 billion but beat the consensus mark by 2.59%. Product revenues (72.2% of total revenues) decreased 9.1% on a year-over-year basis to $9.23 billion.
Revenues from enterprise, public sector, and service provider & cloud declined 6%, 5% and 40% year over year, respectively.
Networking revenues declined 12% year over year to $7.08 billion.
Security revenues were $979 million, up 3% year over year. Collaboration revenues increased 3% to $989 million. Observability revenues increased 16% to $188 million.
Service revenues (27.8% of total revenues) inched up 3.5% year over year to $3.56 billion.
Quarter in Detail
Region-wise, America’s revenues decreased 4% year over year to $7.51 billion and missed the consensus mark by 0.7%.
EMEA revenues declined 7% year over year to $3.48 billion but beat the consensus mark by 5.08%.
APJC revenues decreased 12% year over year to $1.80 billion and missed the consensus mark by 1.79%
Annualized recurring revenues came in at $24.7 billion, up 6% year over year. Product ARR increased 9% year over year.
The remaining performance obligations (“RPO”) at the end of the fiscal second quarter were $35.7 billion, up 12%, with 50% of this amount to be recognized as revenues over the next 12 months. Both product RPO and service RPO increased 12% year over year.
Non-GAAP gross margin expanded 280 basis points (bps) from the year-ago quarter’s level to 66.7%.
On a non-GAAP basis, the product gross margin expanded 310 bps to 65.2%. Service gross margin increased 140 bps to 70.5%.
Non-GAAP operating expenses were $4.32 billion, up 1% year over year. As a percentage of revenues, operating expenses increased 230 bps year over year to 33.8%.
Non-GAAP operating margin expanded 50 bps year over year to 33%.
Balance Sheet and Cash Flow
As of Jan 27, 2024, Cisco’s cash & cash equivalents and investments balance were $25.67 billion compared with $23.5 billion as of Oct 28, 2023.
Total debt (short-term plus long-term) as of Jan 27, 2024, was $11.61 billion higher than $7.65 billion as of Oct 28, 2023.
Cash flow from operating activities was $0.8 billion, lower than the $2.4 billion reported in the previous quarter.
In the reported quarter, Cisco returned $2.8 billion through share repurchases and dividend. It bought approximately 25 million shares for $1.3 billion. The share repurchase program has $8.4 billion remaining under authorization.
Cisco increased its quarterly dividend by 3% to 40 cents per share.
Guidance
For third-quarter fiscal 2024, revenues are expected to be between $12.1 billion and $12.3 billion. The Zacks Consensus Estimate for revenues is pegged at $13.05 billion.
Non-GAAP gross margin is anticipated between 66% and 67% for the quarter.
Non-GAAP operating margin is expected between 33.5% and 34.5% for the quarter.
Non-GAAP earnings are anticipated between 84 cents and 86 cents per share. The Zacks Consensus Estimate is currently pegged at 91 cents per share.
For fiscal 2024, revenues are expected between $51.5 billion and $52.5 billion. Non-GAAP earnings are anticipated between $3.68 and $3.74 per share.
The consensus mark for fiscal 2024 earnings and revenues are pegged at $3.88 per share and $54.21 billion, respectively.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -9.4% due to these changes.
VGM Scores
Currently, Cisco has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Cisco has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Cisco (CSCO) Up 1.5% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Cisco Systems (CSCO - Free Report) . Shares have added about 1.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Cisco due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Cisco Q2 Earnings Top Estimates, Revenues Down Y/Y
Cisco Systems reported second-quarter fiscal 2024 non-GAAP earnings of 87 cents per share, which beat the Zacks Consensus Estimate by 8.62%. The bottom line fell 1.1% year over year.
Revenues decreased 6% year over year to $12.79 billion but beat the consensus mark by 2.59%. Product revenues (72.2% of total revenues) decreased 9.1% on a year-over-year basis to $9.23 billion.
Revenues from enterprise, public sector, and service provider & cloud declined 6%, 5% and 40% year over year, respectively.
Networking revenues declined 12% year over year to $7.08 billion.
Security revenues were $979 million, up 3% year over year. Collaboration revenues increased 3% to $989 million. Observability revenues increased 16% to $188 million.
Service revenues (27.8% of total revenues) inched up 3.5% year over year to $3.56 billion.
Quarter in Detail
Region-wise, America’s revenues decreased 4% year over year to $7.51 billion and missed the consensus mark by 0.7%.
EMEA revenues declined 7% year over year to $3.48 billion but beat the consensus mark by 5.08%.
APJC revenues decreased 12% year over year to $1.80 billion and missed the consensus mark by 1.79%
Annualized recurring revenues came in at $24.7 billion, up 6% year over year. Product ARR increased 9% year over year.
The remaining performance obligations (“RPO”) at the end of the fiscal second quarter were $35.7 billion, up 12%, with 50% of this amount to be recognized as revenues over the next 12 months. Both product RPO and service RPO increased 12% year over year.
Non-GAAP gross margin expanded 280 basis points (bps) from the year-ago quarter’s level to 66.7%.
On a non-GAAP basis, the product gross margin expanded 310 bps to 65.2%. Service gross margin increased 140 bps to 70.5%.
Non-GAAP operating expenses were $4.32 billion, up 1% year over year. As a percentage of revenues, operating expenses increased 230 bps year over year to 33.8%.
Non-GAAP operating margin expanded 50 bps year over year to 33%.
Balance Sheet and Cash Flow
As of Jan 27, 2024, Cisco’s cash & cash equivalents and investments balance were $25.67 billion compared with $23.5 billion as of Oct 28, 2023.
Total debt (short-term plus long-term) as of Jan 27, 2024, was $11.61 billion higher than $7.65 billion as of Oct 28, 2023.
Cash flow from operating activities was $0.8 billion, lower than the $2.4 billion reported in the previous quarter.
In the reported quarter, Cisco returned $2.8 billion through share repurchases and dividend. It bought approximately 25 million shares for $1.3 billion. The share repurchase program has $8.4 billion remaining under authorization.
Cisco increased its quarterly dividend by 3% to 40 cents per share.
Guidance
For third-quarter fiscal 2024, revenues are expected to be between $12.1 billion and $12.3 billion. The Zacks Consensus Estimate for revenues is pegged at $13.05 billion.
Non-GAAP gross margin is anticipated between 66% and 67% for the quarter.
Non-GAAP operating margin is expected between 33.5% and 34.5% for the quarter.
Non-GAAP earnings are anticipated between 84 cents and 86 cents per share. The Zacks Consensus Estimate is currently pegged at 91 cents per share.
For fiscal 2024, revenues are expected between $51.5 billion and $52.5 billion. Non-GAAP earnings are anticipated between $3.68 and $3.74 per share.
The consensus mark for fiscal 2024 earnings and revenues are pegged at $3.88 per share and $54.21 billion, respectively.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -9.4% due to these changes.
VGM Scores
Currently, Cisco has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Cisco has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.