After the closing bell on Wednesday, tech prime Cisco Systems (CSCO - Free Report) reported robust fiscal 2018 fourth-quarter results. The networking giant topped estimates on both revenues and earnings and provided an upbeat outlook.
Results in Detail
Earnings of 70 cents per share outpaced the Zacks Consensus Estimate by a penny and improved from the year-ago earnings of 61 cents. Revenues rose 6% year over year to a record $12.84 billion and edged past the estimated $12.77 billion.
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 clearly paying off. As a result, Cisco now expects revenue growth of 5-7% and earnings per share in the range of 70-72 cents in first-quarter fiscal 2019. The low-end of both the ranges is above the Zacks Consensus Estimate of 3.70% for revenue growth and earnings of 69 cents per share (see: all the Technology ETFs here).
If the networking giant could maintain its projected revenue growth throughout fiscal 2019, then it could top $50 billion in revenues for the first time in its history.
Buoyed by solid results and a bullish outlook, Cisco shares rallied as much as 7% in after-hours trading to new one-year high on heavy volumes. The stock currently has a Zacks Rank #3 (Hold) and a VGM Score of C. However, it belongs to a bottom-ranked industry (bottom 21%).
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:
iShares U.S. Telecommunications ETF (IYZ - Free Report)
This fund follows the Dow Jones U.S. Select Telecommunications Index and offers exposure to 45 American companies that provide telephone and Internet products, services, and technologies. Cisco occupies the third position with 13.9% of the assets. The ETF has AUM of $458.6 million and trades in average daily volumes of 382,000 shares. It charges 43 bps in annual fees and has a Zacks ETF Rank #5 (Strong Sell) (read: Should You Dump Telecom ETFs on Mixed Earnings?).
iShares North American Tech-Multimedia Networking ETF (IGN - Free Report)
This ETF provides concentrated exposure to domestic multimedia networking securities by tracking the S&P North American Technology-Multimedia Networking Index. Holding 23 securities in its basket, Cisco takes the fourth spot with an 8.5% allocation. The product has accumulated $50.4 million in its asset base, while seeing a lower volume of around 27,000 shares a day. Expense ratio comes in at 0.47%. The fund carries a Zacks ETF Rank #2 (Buy) 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 $907.3 million in its asset base and trades in moderate volume of about 77,000 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 fourth position, making up roughly 7.8% 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 $747.4 million in its asset base. The fund charges 60 bps in annual fees and trades in an average daily volume of about 190,000 shares. In total, the product holds 32 stocks in its basket, with Cisco taking the third spot at 6% (read: Solid Q2 Earnings Fail to Lift Cyber Security ETFs).
Invesco Dynamic Networking ETF (PXQ - Free Report)
This fund follows the Dynamic Networking Intellidex Index, holding 30 securities in its basket. Out of these, Cisco is the seventh firm, accounting for 4.8% share. The fund is relatively unpopular and illiquid in the broad techology space, with AUM of $68.9 million and average daily volume of about 7,000 shares. It charges 63 bps in annual fees and has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook (read: 3 Tech ETFs Upgraded to Top Rank Amid Trade Fears).
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