This Could Be Huge for CSCO Stock
The top information technology (IT) player in Internet networking, Cisco Systems, Inc. (NYSE:CSCO), is expected to report its first-quarter results for its fiscal year 2016 after the bell today. CSCO stock has seen some tough times in the last two months but has relatively held on to its value throughout the year. Now may be the right time for prospective CSCO stock investors to rake in some healthy returns. Here’s why.
Cisco Is Worth a Look Ahead of Earnings
As a manufacturer and provider of networking solutions in the telecom and Internet sectors, Cisco enjoys a leading position for many of its product offerings. After the departure of its former chief, John Chambers, CSCO stock investors tied their hopes to the new CEO, Chuck Robbins. Robbins has proved to be an equally great leader ever since taking hold of the company’s reins. The two latest partnership deals and a handful of acquisitions finalized under his leadership have very positive long-term implications for both the company and CSCO stock.
The partnership with Apple Inc. will make the company dominant in the fast-growing Apple ecosystem, while its partnership with Ericsson will bring forth Cisco as a strong force in wireless networking. As next-generation devices take over the world, the concept of the “Internet of things” is poised to become a real phenomenon. The company’s recent moves will prove a boon, as Cisco emerges as a leader in wireless and software connectivity between devices. To make this networking ecosystem even more secure, the company has also been investing in cybersecurity, acquiring key player Lancope early last month.
Coming back around to its first-quarter call later today, Cisco has a history of beating or meeting Street expectations and has not missed estimates in the last seven quarters. I would not be surprised if history repeats itself today. I’m expecting the company to beat the Street’s earnings per share (EPS) estimates and report revenue in line with analyst expectations. The company forecasted EPS to be within the $0.55–$0.57 range for this quarter and revenue to be between $12.49 billion and $12.73 billion. Average analyst expectations for EPS and revenue stand at $0.56 and $12.65 billion, respectively.
In terms of technicals, CSCO stock has remained relatively flat this year. However, compared to its competitors HP, Inc. (NYSE:HPQ) and Oracle Corp. (NYSE:ORCL), Cisco stock has proven to be a better investment.
Chart courtesy of www.StockCharts.com
CSCO stock is up 0.76% year-to-date, more than 10% in a year, and about 42% in the last five years. For long-term value-seekers looking for a stable investment, CSCO stock is worth a second look.
The Bottom Line on CSCO Stock
Financially speaking, Cisco is in a strong position with more than $60.0 billion in cash and short-term investments that covers all of its current and long-term liabilities and still leaves the company with a positive balance. CSCO stock offers a healthy 3.5% dividend yield, with CISCO management’s consistent commitment to stepping up its dividend stream over the last five years.
Cisco’s next big competitor, HP Inc., in no way matches up to Cisco’s growing stronghold over the local and international networking industry. In addition, the company’s latest partnership with Ericsson is expected to bring in a billion dollars in revenue each year going forward from 2018, adding to its growth over the long-term.
Simply put, this is one tech stock I’m really excited about.