Cisco Q4 earnings preview: Here’s everything investors need to know

Being a market leader in its core areas of operation, Cisco Systems (NASDAQ: CSCO) has long been an investors’ favorite. The network gear maker is scheduled to release financial results for the fourth quarter on August 14 at 4:05 pm ET.

Analysts’ consensus earnings estimate for the quarter is $0.82 per share, which represents a 17% year-over-year increase. The forecast comes at the top end of the company’s guidance. Revenues are expected to grow 4% annually to $13.39 billion, which is slightly below the management’s outlook.

The bullish view indicates that the potential impact of the US-China trade war and fluctuations in the global economy on the June-quarter performance will be minimal. Infrastructure Platforms, the core business segment, will continue to be the main growth driver. The growing market for security services, the company’s current area of focus, should add to revenue growth in the to-be-reported quarter and beyond.

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As part of its efforts to deliver value to shareholders, the management has been bringing innovation to the pipeline through a new business model that includes software offerings and subscriptions. Complementing the shift in business strategy – transitioning from a products-based firm to a full-fledged solutions provider – the company is making investments in high-growth sectors, including cloud and Internet of Things.

Further, the tech firm is poised to tap the growing demand for its products and services to drive margins in the long term. The average rating given by leading analysts in the past three months is buy, while a slightly lesser number of analysts recommend hold. The consensus price target is around $60.

Related: Cisco Q3 2019 Earnings Conference Call Transcript

In the third quarter, strong revenue growth across the board pushed up the top-line to about $13 billion, resulting in double-digit growth in earnings to $0.78 per share.

Cisco’s shares climbed to a nine-year high earlier this year, after gaining steadily over the past twelve months. The stock gained 24% since the beginning of the year, outperforming its peers in the technology and IT industry including Apple (AAPL) and Google (GOOGL). The stock got a major boost from the impressive financial performance in the last quarter.

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