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Buy Cisco Stock Before Earnings for Its Dividend and Value?
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Cisco (CSCO - Free Report) is set to report its fourth quarter fiscal 2020 financial results after the closing bell on Wednesday, August 12. The networking equipment giant’s sales and earnings are expected to take a hit, but the stock might offer some investors with other opportunities they are looking for amid the broader economic uncertainty.
Cisco is one of the world’s largest makers of switches, routers, and other networking equipment. The firm, which is projected to pull in just under $50 billion in revenue this year, topped our third quarter estimates and still provided guidance despite coronavirus uncertainty that saw many other big names withdraw their outlooks.
Cisco is also transitioning to more software and subscription offerings, alongside much of the broader tech world. CSCO’s WebEx videoconferencing service could also gain more traction during what might be an extended remote-work period. “We saw continued strong adoption of our SaaS-based offerings and now have 74% of our software that is subscription versus 65% a year ago,” CEO Chuck Robbins said in on its Q3 earnings call.
“We also believe we remain well-positioned over the long-term to serve our customers and create differentiated value aligned to cloud, 5G, Wi-Fi 6 and 400 gig.”
Looking ahead, our Zacks estimates call for CSCO’s adjusted Q4 earnings to slip 11% to $0.74 per share, on 10% lower sales that would see it hit $12.09 billion. This top-line estimate would come in below last quarter’s 8% sales decline, which marked its worst fall in six years.
That said, Cisco topped our EPS estimate by 10% last quarter, as part of a long run of earnings beats. Meanwhile, the firm could benefit down the road as more countries reevaluate their relationships with Huawei.
CSCO shares are up 36% since the market’s March lows, which lags the tech sector’s 58%. But unlike many of its tech giant peers, Cisco rests 10% off its 52-week highs and its valuation is hardly stretch. In fact, CSCO trades at 16.7X forward 12-month earnings, compared to the tech industry’s 26.7X.
Furthermore, Cisco’s 3.06% dividend yield tops Intel’s (INTC - Free Report) 2.75%, the S&P 500’s 1.71% average, and the 10-year U.S. Treasury note’s 0.56%. Cisco is a Zacks Rank #2 (Buy) at the moment, alongside its “B” grade for Value in our Style Scores system.
Nonetheless, interested investors might want to wait until after the networking titan reports before making a decision.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.3% per year.
These 7 were selected because of their superior potential for immediate breakout.
Buy Cisco Stock Before Earnings for Its Dividend and Value?
Cisco (CSCO - Free Report) is set to report its fourth quarter fiscal 2020 financial results after the closing bell on Wednesday, August 12. The networking equipment giant’s sales and earnings are expected to take a hit, but the stock might offer some investors with other opportunities they are looking for amid the broader economic uncertainty.
Cisco is one of the world’s largest makers of switches, routers, and other networking equipment. The firm, which is projected to pull in just under $50 billion in revenue this year, topped our third quarter estimates and still provided guidance despite coronavirus uncertainty that saw many other big names withdraw their outlooks.
Cisco is also transitioning to more software and subscription offerings, alongside much of the broader tech world. CSCO’s WebEx videoconferencing service could also gain more traction during what might be an extended remote-work period. “We saw continued strong adoption of our SaaS-based offerings and now have 74% of our software that is subscription versus 65% a year ago,” CEO Chuck Robbins said in on its Q3 earnings call.
“We also believe we remain well-positioned over the long-term to serve our customers and create differentiated value aligned to cloud, 5G, Wi-Fi 6 and 400 gig.”
Looking ahead, our Zacks estimates call for CSCO’s adjusted Q4 earnings to slip 11% to $0.74 per share, on 10% lower sales that would see it hit $12.09 billion. This top-line estimate would come in below last quarter’s 8% sales decline, which marked its worst fall in six years.
That said, Cisco topped our EPS estimate by 10% last quarter, as part of a long run of earnings beats. Meanwhile, the firm could benefit down the road as more countries reevaluate their relationships with Huawei.
CSCO shares are up 36% since the market’s March lows, which lags the tech sector’s 58%. But unlike many of its tech giant peers, Cisco rests 10% off its 52-week highs and its valuation is hardly stretch. In fact, CSCO trades at 16.7X forward 12-month earnings, compared to the tech industry’s 26.7X.
Furthermore, Cisco’s 3.06% dividend yield tops Intel’s (INTC - Free Report) 2.75%, the S&P 500’s 1.71% average, and the 10-year U.S. Treasury note’s 0.56%. Cisco is a Zacks Rank #2 (Buy) at the moment, alongside its “B” grade for Value in our Style Scores system.
Nonetheless, interested investors might want to wait until after the networking titan reports before making a decision.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.3% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>