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After the closing bell on Wednesday, one of the tech primes, Cisco Systems (CSCO - Free Report) , continued its strong momentum in the tech space with better-than-expected fiscal second-quarter results. The networking giant topped estimates on both revenues and earnings and posted its first revenue growth in two years (see: all the Technology ETFs here).

Additionally, it provided an upbeat outlook and boosted its dividend and share buyback program, suggesting the company’s turnaround story.

Results in Detail

Earnings of 63 cents per share outpaced the Zacks Consensus Estimate by four cents and improved 11% from the year-ago earnings. Revenues rose 3% year over year to $11.9 billion and edged past the estimated $11.82 billion. With revenue growth, Cisco broke its eight consecutive quarters of decline (read: 4 Sector ETFs to Play Q4 Revenue Growth).

The networking leader’s transition from its traditional business of high-end switches and routers to high-growth areas such as security, the Internet of Things and cloud computing, is now paying off. As a result, Cisco now expects revenues growth of 3-5% in the fiscal third quarter and earnings per share in the range of 64-66 cents; the lower end is well above the Zacks Consensus Estimate of 62 cents.

Further, Cisco plans to bring back $67 billion (or $57 billion after taxes) overseas cash to United States in the fiscal third quarter as a result of a new tax legislation and expects to spend much of this newly repatriated cash on share buybacks and dividends. The company raised its quarterly dividend by 14% to 33 cents per share and buyback authorization program by $25 billion to $31 billion.

Given solid results and a bullish outlook, Cisco shares surged as much as 6% to $44.61 in after-hours trading on heavy volumes. Per the FactSet data, it represents the highest closing for the stock since Dec 15, 2000. Currently, Cisco has a Zacks Rank #3 (Hold) and a VGM Style Score of D. However, it belongs to a bottom-ranked industry (bottom 8%).

ETFs to Watch

ETFs having the largest allocation to this network giant will be in focus over the coming days. Investors should closely monitor the movement in these funds and grab the opportunity when it arises (read: 6 Dow Stocks That Should Drive These ETFs Higher):

iShares North American Tech-Multimedia Networking ETF (IGN - Free Report)

This ETF provides a concentrated exposure to domestic multimedia networking securities by tracking the S&P North American Technology-Multimedia Networking Index. Holding 25 securities in its basket, Cisco takes the top spot with an 8.9% allocation. The product has accumulated $50.2 million in its asset base while sees a lower volume of around 9,000 shares a day. Expense ratio comes in at 0.48%. The fund carries a Zacks ETF Rank #3 with a High risk outlook.

First Trust NASDAQ Technology Dividend Index Fund (TDIV - Free Report)

This fund provides exposure to the dividend payers in the technology sector by tracking the Nasdaq Technology Dividend Index. The product has amassed about $825.5 million in its asset base and trades in moderate volume of about 68,000 shares per day. The ETF charges 50 bps in annual fees and holds about 94 securities in its basket. Of these firms, CSCO occupies the top position, making up roughly 8.8% of the assets. In terms of industrial exposure, the fund allocates more than one-fourth portion in semiconductor and semiconductor equipment, followed by software (15.1%), technology hardware, storage & peripherals (12.8%), diversified telecom services (11.5%) and communications equipment (10.3%) (read: Can Tech ETFs Regain Investors' Love After Selloff Snub?).

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 $412 million in its asset base. The fund charges 60 bps in annual fees and trades in an average daily volume of about $1 million shares. In total, the product holds 33 stocks in its basket, with Cisco taking the top spot at 6.9%. It is skewed toward the software industry at 53.4%, while communications equipment rounds off the next spot at 20.6% of assets.

PowerShares Dynamic Networking Portfolio (PXQ - Free Report)

This fund follows the Dynamic Networking Intellidex Index, holding 30 securities in its basket. Out of these, Cisco is the second firm, accounting for 5.5% share. From a sector look, communications equipment accounts for 40% of the portfolio, followed by 36% in software and programming. The fund is relatively unpopular and illiquid in the broad tech space with AUM of $50.4 million and average daily volume of about 7,000 shares. It charges 63 bps in annual fees and has a Zacks ETF Rank #2 (Buy) with a High risk outlook.

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