Technology

What to Expect From Cisco Earnings

Chris Lange

Cisco Systems Inc. (NASDAQ: CSCO) is scheduled to release its most recent quarterly financial results Wednesday after the markets close. Thomson Reuters has consensus estimates of $0.53 in earnings per share (EPS) on $12.07 billion in revenue. In the same quarter of the previous year, Cisco reported EPS of $0.51 and revenue of $11.54 billion.

John Chambers, CEO of Cisco for 20 years, recently announced that there would be a changing of the guard. Chuck Robbins will take over the position at the helm of the world’s largest networking equipment company.

Recently, the company won an important contract for the Verizon build-out of the company’s next-generation 100G metro network. While the optical business is a small part of total revenue, this win is seen by Wall Street as a significant endorsement of the investments Cisco has made into its optics business.

In terms of its stock repurchase plans and announcements, Cisco is a company that deserves kudos for clear communications in its earnings releases, as it spells out each time how many shares were bought and for what price, as well as showing what the cumulative tally has been over time.

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As of January 24, 2015, Cisco had repurchased and retired 4.4 billion shares of its own common stock. It was also profitable, if you look at the average share price versus recent trading, as the average price for stock buybacks was listed as $20.73 per share, bringing the total buybacks to about $90.7 billion since the company began its stock buyback plan.

A few analysts weighed in on Cisco ahead of earnings:

  • Cisco was raised to Overweight from Sector Perform at Pacific Crest.
  • Raymond James has an Outperform rating and raised its price target to $33 from $30.
  • Oppenheimer has an Outperform rating and raised its price target to $32 from $30.

The networking giant trades at a low 13.6 estimated 2015 earnings and has a strong 7.44 free cash flow yield. Cisco also seems to have fought through numerous headwinds, including up and down demand from telecom carriers, weakness in emerging markets and threats to its very lucrative switching business, all of which many top analysts feel are going away. The company also stands to benefit from a better corporate spending environment in Europe, as well as continued growth at home.

Shares of Cisco were up 0.4% at $29.36 on Monday afternoon. The stock has a consensus analyst price target of $30.09 and a 52-week trading range of $22.49 to $30.31.

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