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Cisco (CSCO) Up 2.2% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Cisco Systems (CSCO - Free Report) . Shares have added about 2.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Cisco due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Cisco Systems reported fourth-quarter fiscal 2024 non-GAAP earnings of 87 cents per share, which beat the Zacks Consensus Estimate by 2.35%. The bottom line fell 23.7% year over year.
Revenues decreased 10.3% year over year to $13.64 billion but beat the consensus mark by 0.9%. Product revenues (72.3% of total revenues) decreased 15.4% on a year-over-year basis to $9.86 billion.
Splunk contributed $960 million of total revenues in the reported quarter.
Networking revenues declined 28% year over year to $6.80 billion.
Security revenues were $1.79 billion, up 81% year over year. Collaboration revenues were unchanged at $1.02 billion. Observability revenues increased 41% to $248 million.
Service revenues (27.7% of total revenues) increased 6.5% year over year to $3.78 billion.
Quarter in Detail
Region-wise, America’s revenues decreased 11% year over year to $8.07 billion and missed the consensus mark by 0.7%.
EMEA revenues declined 11% year over year to $3.51 billion but beat the consensus mark by 5.08%.
APJC revenues decreased 6% year over year to $2.06 billion and missed the consensus mark by 1.79%
Annualized recurring revenues came in at $29.6 billion, up 22% year over year. Product ARR surged 44% year over year.
Non-GAAP gross margin expanded 200 basis points (bps) from the year-ago quarter’s level to 67.9%.
On a non-GAAP basis, the product gross margin expanded 160 bps to 67%. Service gross margin increased 280 bps to 70.3%.
Non-GAAP operating expenses were $4.83 billion, up 3.9% year over year. As a percentage of revenues, operating expenses increased 480 bps year over year to 35.4%.
Non-GAAP operating margin contracted 280 bps year over year to 32.5%.
Balance Sheet and Cash Flow
As of Jul 27, 2024, Cisco’s cash & cash equivalents and investments balance were $17.9 billion compared with $18.8 billion as of Apr 27, 2024.
Total debt (short-term plus long-term), as of Jul 27, 2024, was $30.96 billion, lower than $32 billion as of Apr 27, 2024.
Cash flow from operating activities was $3.7 billion, lower than $4 billion reported in the previous quarter.
The remaining performance obligations (“RPO”) at the end of the fiscal fourth quarter were $41 billion, up 18%, with 51% of this amount to be recognized as revenues over the next 12 months. Product RPO increased 27% year over year, while service RPO increased 10%.
In the reported quarter, Cisco returned $3.6 billion through share repurchases and dividends. It bought approximately 43 million shares for $2 billion. The share repurchase program has $5.2 billion remaining under authorization.
Guidance
For first-quarter fiscal 2025, revenues are expected to be between $13.65 billion and $13.85 billion.
Non-GAAP gross margin is anticipated between 67% and 68% for the quarter.
Non-GAAP operating margin is expected between 32% and 33% for the quarter.
Non-GAAP earnings are anticipated between 86 cents and 88 cents per share.
For fiscal 2025, revenues are expected between $55 billion and $56.2 billion. Non-GAAP earnings are anticipated between $3.52 and $3.58 per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, Cisco has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Cisco has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Cisco belongs to the Zacks Computer - Networking industry. Another stock from the same industry, NETGEAR, Inc. (NTGR - Free Report) , has gained 34.5% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
NETGEAR reported revenues of $143.9 million in the last reported quarter, representing a year-over-year change of -17%. EPS of -$0.74 for the same period compares with -$0.16 a year ago.
NETGEAR is expected to post a loss of $0.41 per share for the current quarter, representing a year-over-year change of -278.3%. Over the last 30 days, the Zacks Consensus Estimate has changed -21.1%.
NETGEAR has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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Cisco (CSCO) Up 2.2% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Cisco Systems (CSCO - Free Report) . Shares have added about 2.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Cisco due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Cisco Systems reported fourth-quarter fiscal 2024 non-GAAP earnings of 87 cents per share, which beat the Zacks Consensus Estimate by 2.35%. The bottom line fell 23.7% year over year.
Revenues decreased 10.3% year over year to $13.64 billion but beat the consensus mark by 0.9%. Product revenues (72.3% of total revenues) decreased 15.4% on a year-over-year basis to $9.86 billion.
Splunk contributed $960 million of total revenues in the reported quarter.
Networking revenues declined 28% year over year to $6.80 billion.
Security revenues were $1.79 billion, up 81% year over year. Collaboration revenues were unchanged at $1.02 billion. Observability revenues increased 41% to $248 million.
Service revenues (27.7% of total revenues) increased 6.5% year over year to $3.78 billion.
Quarter in Detail
Region-wise, America’s revenues decreased 11% year over year to $8.07 billion and missed the consensus mark by 0.7%.
EMEA revenues declined 11% year over year to $3.51 billion but beat the consensus mark by 5.08%.
APJC revenues decreased 6% year over year to $2.06 billion and missed the consensus mark by 1.79%
Annualized recurring revenues came in at $29.6 billion, up 22% year over year. Product ARR surged 44% year over year.
Non-GAAP gross margin expanded 200 basis points (bps) from the year-ago quarter’s level to 67.9%.
On a non-GAAP basis, the product gross margin expanded 160 bps to 67%. Service gross margin increased 280 bps to 70.3%.
Non-GAAP operating expenses were $4.83 billion, up 3.9% year over year. As a percentage of revenues, operating expenses increased 480 bps year over year to 35.4%.
Non-GAAP operating margin contracted 280 bps year over year to 32.5%.
Balance Sheet and Cash Flow
As of Jul 27, 2024, Cisco’s cash & cash equivalents and investments balance were $17.9 billion compared with $18.8 billion as of Apr 27, 2024.
Total debt (short-term plus long-term), as of Jul 27, 2024, was $30.96 billion, lower than $32 billion as of Apr 27, 2024.
Cash flow from operating activities was $3.7 billion, lower than $4 billion reported in the previous quarter.
The remaining performance obligations (“RPO”) at the end of the fiscal fourth quarter were $41 billion, up 18%, with 51% of this amount to be recognized as revenues over the next 12 months. Product RPO increased 27% year over year, while service RPO increased 10%.
In the reported quarter, Cisco returned $3.6 billion through share repurchases and dividends. It bought approximately 43 million shares for $2 billion. The share repurchase program has $5.2 billion remaining under authorization.
Guidance
For first-quarter fiscal 2025, revenues are expected to be between $13.65 billion and $13.85 billion.
Non-GAAP gross margin is anticipated between 67% and 68% for the quarter.
Non-GAAP operating margin is expected between 32% and 33% for the quarter.
Non-GAAP earnings are anticipated between 86 cents and 88 cents per share.
For fiscal 2025, revenues are expected between $55 billion and $56.2 billion. Non-GAAP earnings are anticipated between $3.52 and $3.58 per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, Cisco has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Cisco has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Cisco belongs to the Zacks Computer - Networking industry. Another stock from the same industry, NETGEAR, Inc. (NTGR - Free Report) , has gained 34.5% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
NETGEAR reported revenues of $143.9 million in the last reported quarter, representing a year-over-year change of -17%. EPS of -$0.74 for the same period compares with -$0.16 a year ago.
NETGEAR is expected to post a loss of $0.41 per share for the current quarter, representing a year-over-year change of -278.3%. Over the last 30 days, the Zacks Consensus Estimate has changed -21.1%.
NETGEAR has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.