Categories Analysis, Earnings, Technology

Strong earnings growth in cards as Cisco gets ready for Q1 report

Cisco Systems (CSCO) will be reporting its first-quarter earnings on November 14 after the closing bell, and the network solutions provider is widely expected to post higher revenues and earnings. Analysts’ consensus estimate is for an 18% growth in earnings per share to $0.72 on revenues of $12.87 billion, which represents a 6.1% year-over-year increase.

Considering its positive post-earnings performance in the recent quarters, Cisco’s stock is a sure bet as far as returns and profitability are concerned. Like in the trailing four quarters, the chances of first-quarter results beating the street view are very high.

Continuing the trend seen in the fourth quarter, revenue stands to benefit from the company’s recent acquisitions. The top-line growth will be driven by the Security and Applications segments this time too. Of late, web security, network security and advanced threat solutions have witnessed strong demand.

Considering its positive post-earnings performance in the recent quarters, Cisco’s stock is a sure bet as far as returns and profitability are concerned

In the fourth quarter, Cisco recorded earnings of $0.70 per share on revenues of $12.8 billion, both beating Wall Street estimates. In recent weeks, most research firms raised their rating on the Cisco stock and set price targets in the range of $47 to $50.

In the upcoming quarters, overall performance will be boosted by the company’s restructuring initiatives, with focus on workforce reduction. The management this week confirmed reduction of 200-300 jobs in customer experience, cloud platforms and solutions group in an effort to “bring value to customers.” Meanwhile, the affected employees have the choice to get re-employed in other departments.

Also see: Cisco Systems Q4 2018 Earnings Conference Call Transcript

Earlier this week, the San Jose, California-based company entered into a partnership with Amazon Web Services (AWS) to develop a hybrid solution that would simplify the process of deploying distributed applications on networks and switching between cloud and traditional data centers.

Cisco shares reached a 17-year high last month and gained about 22% over the past twelve months. The stock dropped slightly in pre-market trading Friday, after closing the previous trading session higher.


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