Cisco Systems (CSCO) Touches 52-Week High on Strong Q4

Shares of technology company Cisco Systems CSCO hit a new 52-week high of $31.70 on Aug 29, eventually closing at $31.58. The company returned 22.0% in the last one-year period and delivered a year-to-date return of roughly 16.3%. Average volume of shares traded over the last three months was roughly 23,103K.

What is Driving Cisco?

Cisco is the leading provider of IP-based networking and other products and has a well-diversified business model. The company stands to benefit from its recent successful ventures including its “Internet of Everything” campaign and a cloud-based service called Intercloud that connects private, public and hybrid clouds. Additionally, the company is poised to grow on its drive toward cloud computing and increasing data flow on carrier and computing networks.

Moreover, the company gained momentum from strong fundamentals and better-than-expected fourth-quarter fiscal 2016 results reported on Aug 17. In response to its strong earnings, the stock has gained 2.8%.

In the fiscal fourth quarter, Cisco reported earnings of 58 cents per share, surpassing the Zacks Consensus Estimate by 3 cents. Also, revenues increased 5.3% sequentially but declined 1.6% year over year to $12.6 billion, which came above the Zacks Consensus Estimate of $12.5 billion.

Moreover, the recent announcement to reduce the head count by 5,500 positions or 7% is also encouraging. Cisco intends to reinvest the cost savings from these actions in key priority areas such as security, IoT, collaboration, next generation data center and cloud.

Also, Cisco’s recent plans to acquire a cloud-based security company, CloudLock, for $293 million is a big positive. The buyout will enhance Cisco’s current cloud security offerings through increased visibility and threat awareness of CloudLock’s cloud delivered platform. The purchase will help the network equipment maker to broaden its efforts as well as meet changing compliance and security needs.

Moreover, we remain positive on the company’s strong cash position and ability to service long-term debts. Moreover, continuous share buybacks and dividend increase will inspire investors’ loyalty through high returns.

In the trailing four quarters, the company delivered an average positive earnings surprise of nearly 7.95%. Cisco’s strong revenue growth, solid financial conditions, growth in areas like cloud computing, mobile, data center as well as strong long-term growth potential position it favorably.

Currently, Cisco has a Zacks Rank #3 (Hold).

CISCO SYSTEMS Price and Consensus

 

CISCO SYSTEMS Price and Consensus | CISCO SYSTEMS Quote

Stocks to Consider

Some well-placed stocks in the same space are Silicon Laboratories Inc. SLAB, sporting a Zacks Rank #1, and Intel Corp. INTC and Inphi Corporation IPHI, carrying a Zacks Rank #2 (Buy).

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