Days before the earnings report of CISCO Systems Incorporated, the stock showed a significant increase, following the previous upbeat quarterly reports. During the previous session, the multinational corporation technology touched $30.88, a total recovery from the slump of $27.31 after the company’s end of support for version 2.0, 2.5 and 2.6 of the Cisco WebEx Meetings Server.
After the closing bell on August 17, Cisco will deliver its last quarter earnings report in 2016. Most of the experts estimated a positive result from the largest networking company. The stock made a significant jump from its previous reports and it will likely be the same trend for the fourth quarter.
CISCO Previous Reports
As seen in the image below, CISCO advanced after its earnings report. In its financial report in the first quarter, the company had revenue of $12.7 billion, climbing almost 4 percent on an annual basis. In the first fiscal year for 2016, CISCO had an earnings per share (eps) of $0.48 GAAP and $0.59 non-GAAP. The company focused on its cloud services as it acquired OpenDNS, MaintenanceNet, and Pawaa Software.
It was followed by another strong report in the second quarter, whereas the company earned $11.8 billion and the EPS went $0.62 GAAP and $0.57 non-GAAP. Despite a challenging macro environment, CISCO pushed through its investment in Portcullis, ParStream, Lancope and 1 Mainstream as it paid attention on security, data analytics and video markets. Also, the company successfully acquired Acano in the said period.
Meanwhile, the company showed a better revenue result in the third quarter, from $11.8 billion it went up $12.0 billion. The GAAP EPS eased a little from $0.62 to $0.46 while the Non-gaap remained at $0.57 as it focused more on software and subscription. During the third quarter of 2016, CISCO completed the deal with Jasper Technologies, Synata, Leaba and CliQr as it aimed to improve its product portfolio.
Fourth Quarter Performance
Considering the quarter by quarter revenue blow up by the company, the last quarter might imitate the same trend. Supporting the uptrend of the stock was the price increase of the equipment in Europe after the remarkable Brexit. Alongside with this, the U.S. dollar had been relatively strong in the past few months.
Looking through the recent investments and acquisition deals of the stock, its margin could expand through product breakthroughs in the coming year. In the third quarter, the deferred revenue of Cisco advanced 8 percent, whereas deferred product revenue increased 9 percent and the deferred service revenue added 7 percent.
The company received a bullish price target of $39 while the bearish one stood at $22 based on the estimates conducted by Zacks Research. Shares of Cisco lost 0.26 percent to $30.87 earlier with a market capitalization of $154.87 billion. However, it might just be temporary and may trade higher ahead of the earnings report. Currently, the company has a dividend yield of 3.37 percent and a price earnings ratio of 15.36.
For the fourth quarter, the company had forecasted a 3 percent increase on its revenue and GAAP EPS from $0.48 to $0.53 while Non-GAAP may turn from $0.59 to $0.61. The market waits for the conclusion of the Imperva Deal which could drive significant revenue in the company.
A top executive from a Cisco Gold solution provider revealed that “Imperva would be a huge hit for Cisco. There’s a couple areas like DDoS and web application firewalls – they have some of those things that Cisco is currently not participating in. So it’s going to fill in some key holes if Cisco wants to be that end-to-end security provider.”
Cisco remains to be a highly recommended stock for investors who seek profit from cloud service providers. FSM issued consensus earnings estimates of $0.50 to $0.60 earnings per share and a revenue of $12 billion to $13 billion in light of the support provided by its previous deals and the improvement of its software and subscription.
The company has surpassed the analysts’ estimates approximately four percent on average in 2015. Also, the stock has been up for 16.6 percent year to date and has been proving its capabilities in providing the best tech equipment. For Cisco, it has always been about innovation and partnerships. Thus, expect a strong earnings report for the last fiscal year of 2016.
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