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After the closing bell on Wednesday, one of the tech primes, Cisco Systems (CSCO - Free Report) , reported fiscal fourth-quarter results. While the networking giant met our estimates on both earnings and revenues, it once again disappointed investors with a bleak revenue guidance.
Earnings of 55 cents per share came in line with the Zacks Consensus Estimate. Revenues of $12.13 billion also met our estimates but declined for the seventh consecutive quarter, falling 4% year over year.
The networking leader has been transitioning its traditional business of high-end switches and routers to high-growth areas such as security, the Internet of Things and cloud computing. As a result, Cisco expects revenues to decline 1-3% year over year for the ongoing fiscal first-quarter 2018. Earnings per share are expected in the range of 59–61 cents, the midpoint of which is much above the Zacks Consensus Estimate of 55 cents (see: all the Technology ETFs here).
The bleak revenue guidance took a toll on investors’ sentiments, pushing CSCO shares down 2.5% in after-hours trading yesterday. Currently, Cisco has a Zacks Rank #3 (Hold) with a VGM Style Score of B and boasts a dismal Industry Rank in the bottom 37%, indicating that some pain is in store for the stock.
ETFs to Watch
Given this, 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 or avoid if the stocks drags them down:
iShares North American Tech-Multimedia Networking ETF
This ETF provides a concentrated exposure to domestic multimedia networking securities by tracking the S&P North American Technology-Multimedia Networking Index. Holding 24 securities in its basket, Cisco takes the second spot with a 9.05% allocation. The product has accumulated $63.7 million in its asset base while sees a lower volume of around 19,000 shares a day. Expense ratio comes in at 0.48%. The fund has added 4.2% in the year-to-date time frame and has a Zacks ETF Rank of 3 with a High risk outlook (read: Forget Big Tech, Bet on These Overlooked ETFs).
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 $716.1 million in its asset base and trades in moderate volume of about 75,000 shares per day. The ETF charges 50 bps in annual fees and holds about 88 securities in its basket. Of these firms, CSCO occupies the third position, making up roughly 8.2% of the assets. In terms of industrial exposure, the fund allocates more than one-fourth portion in semiconductor and semiconductor equipment, followed by software (15.4%), diversified telecom services (14.7%), technology hardware, storage & peripherals (12.7%), and communications equipment (10.5%). The fund is up 9.6% so far this year.
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 $274.2 million in its asset base. The fund charges 60 bps in annual fees and trades in a moderate average daily volume of about 94,000 shares. In total, the product holds 30 stocks in its basket, with Cisco taking the second spot at 6.3%. It is skewed toward the software industry at 48.6%, while communications equipment rounds off the next spot at 23.5% of assets. The fund has risen about 8.3% in the year-to-date time frame (read: Cyber Security ETFs in Focus on Robust Q2 Earnings).
PowerShares Dynamic Networking Portfolio
This fund follows the Dynamic Networking Intellidex Index, holding 30 securities in its basket. Out of these, Cisco is the fourth firm accounting for a 5.2% share. From a sector look, communication equipment accounts for 42% of the portfolio, followed by 36% in software and programming. The fund is unpopular and illiquid in the broad tech space with AUM of $24.1 million and average daily volume of about 4,000 shares. It charges 63 bps in annual fees and has gained 8.7% in the year-to-date time frame. PXQ has a Zacks ETF Rank of 2 or ‘Buy’ rating with a High risk outlook.
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ETFs in Focus Post Cisco Results
After the closing bell on Wednesday, one of the tech primes, Cisco Systems (CSCO - Free Report) , reported fiscal fourth-quarter results. While the networking giant met our estimates on both earnings and revenues, it once again disappointed investors with a bleak revenue guidance.
Earnings of 55 cents per share came in line with the Zacks Consensus Estimate. Revenues of $12.13 billion also met our estimates but declined for the seventh consecutive quarter, falling 4% year over year.
The networking leader has been transitioning its traditional business of high-end switches and routers to high-growth areas such as security, the Internet of Things and cloud computing. As a result, Cisco expects revenues to decline 1-3% year over year for the ongoing fiscal first-quarter 2018. Earnings per share are expected in the range of 59–61 cents, the midpoint of which is much above the Zacks Consensus Estimate of 55 cents (see: all the Technology ETFs here).
The bleak revenue guidance took a toll on investors’ sentiments, pushing CSCO shares down 2.5% in after-hours trading yesterday. Currently, Cisco has a Zacks Rank #3 (Hold) with a VGM Style Score of B and boasts a dismal Industry Rank in the bottom 37%, indicating that some pain is in store for the stock.
ETFs to Watch
Given this, 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 or avoid if the stocks drags them down:
iShares North American Tech-Multimedia Networking ETF
This ETF provides a concentrated exposure to domestic multimedia networking securities by tracking the S&P North American Technology-Multimedia Networking Index. Holding 24 securities in its basket, Cisco takes the second spot with a 9.05% allocation. The product has accumulated $63.7 million in its asset base while sees a lower volume of around 19,000 shares a day. Expense ratio comes in at 0.48%. The fund has added 4.2% in the year-to-date time frame and has a Zacks ETF Rank of 3 with a High risk outlook (read: Forget Big Tech, Bet on These Overlooked ETFs).
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 $716.1 million in its asset base and trades in moderate volume of about 75,000 shares per day. The ETF charges 50 bps in annual fees and holds about 88 securities in its basket. Of these firms, CSCO occupies the third position, making up roughly 8.2% of the assets. In terms of industrial exposure, the fund allocates more than one-fourth portion in semiconductor and semiconductor equipment, followed by software (15.4%), diversified telecom services (14.7%), technology hardware, storage & peripherals (12.7%), and communications equipment (10.5%). The fund is up 9.6% so far this year.
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 $274.2 million in its asset base. The fund charges 60 bps in annual fees and trades in a moderate average daily volume of about 94,000 shares. In total, the product holds 30 stocks in its basket, with Cisco taking the second spot at 6.3%. It is skewed toward the software industry at 48.6%, while communications equipment rounds off the next spot at 23.5% of assets. The fund has risen about 8.3% in the year-to-date time frame (read: Cyber Security ETFs in Focus on Robust Q2 Earnings).
PowerShares Dynamic Networking Portfolio
This fund follows the Dynamic Networking Intellidex Index, holding 30 securities in its basket. Out of these, Cisco is the fourth firm accounting for a 5.2% share. From a sector look, communication equipment accounts for 42% of the portfolio, followed by 36% in software and programming. The fund is unpopular and illiquid in the broad tech space with AUM of $24.1 million and average daily volume of about 4,000 shares. It charges 63 bps in annual fees and has gained 8.7% in the year-to-date time frame. PXQ has a Zacks ETF Rank of 2 or ‘Buy’ rating with a High risk outlook.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>