Cisco Systems (CSCO) Accumulates Earnings Surprise History

Shares of Cisco Systems, Inc. (CSCO) closed down $0.12 or 0.43% to $27.90 per share in Wednesday's trading session but surged in after-hours trading session. The company reported better-than-expected earnings for the fourth quarter.

Cisco offers a complete line of routers and switching products that connect and manage communications among local and wide area computer networks employing a variety of protocols.

The company tops Wall Street's earnings and revenue expectations. For the company's fourth quarter, the California-based firm reported net income of $2.32 billion or $0.45 per share compared to $2.25 or $0.43 per share in the same period one year ago.
On an adjusted basis, earnings from continuing operations came in at $0.59 per share and beat analyst's consensus by $0.03.

Moreover, revenue for the quarter was $12.84 billion, up 4% from last year and surpassing estimates by $0.12 billion.

"As we closed our fiscal year, we delivered record revenues and record non-GAAP EPS for both Q4 and fiscal year 2015. We're growing our business and earnings while driving the evolution of our portfolio and how we bring increasing value to our customers. We demonstrated our continued commitment to driving shareholder value, and in FY 2015 returned $8.3 billion to shareholders through share buybacks and dividends, which represented 73% of our free cash flow", said CEO Charles H. Robbins.

For the first quarter, the company expects earnings of $0.55-$0.57 per share and revenue growth between 2% and 4%.

When looking at the long-term catalyst, the company should benefit from a rise in bandwidth consumption, a higher demand for data center solutions and the migration to cloud networking. Considering an improving economy, the risk for a downturn in enterprise or government spending seems unlikely. Further, the firm focuses on service capabilities, which have been an area of strength in the past years, due to a faster growth than product sales. As a matter of fact, service gross margins are about 60%, which is considered high because it is above the other segment's average. Cisco has a global market share and an attractive 2.9% dividend yield which might attract income investors. Perhaps tomorrow investors should take a closer look at this stock.

Manning & Napier Advisors has upped its stake in the stock by 29.30% to 756,486 shares in the second quarter of 2015.

Shares of the company remained flat in a year-to-date basis but rose 11.47% in the past 12 months.
Published on Aug 12, 2015
By Omar Venerio
Capital Markets, Derivatives and Financial Management Professor, Master in Finance and CFA candidate. I am an independent trader of stocks and options and passionate about the stock market.

Copyrighted 2020. Content published with author's permission.

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