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Cisco Systems (CSCO) to Report Q2 Earnings: Factors to Note

·4 min read

Cisco Systems CSCO is set to release second-quarter fiscal 2022 results on Feb 16.

The company anticipates second-quarter fiscal 2022 revenues to improve in the range of 4.5-6.5% on a year-over-year basis.

The Zacks Consensus Estimate for revenues is pegged at $12.65 billion, indicating an increase of 5.79% over the year-ago quarter’s reported figure.

Non-GAAP earnings are anticipated between 80 and 82 cents per share.

The consensus mark for earnings has been stable in the past seven days at 81 cents per share. The figure suggests growth of 2.53% from the prior-year quarter’s level.

Cisco Systems, Inc. Price and EPS Surprise

Cisco Systems, Inc. Price and EPS Surprise
Cisco Systems, Inc. Price and EPS Surprise

Cisco Systems, Inc. price-eps-surprise | Cisco Systems, Inc. Quote

Let’s see how things have shaped up for Cisco prior to this announcement.

Factors Likely to Have Influenced Q2 Results

Cisco’s extensive product portfolio and varied end-user base are expected to have positively contributed to the fiscal second-quarter top-line growth.

Accelerated digital transformation across the globe and the need to build a safe hybrid-work environment are driving demand for Cisco’s solutions.

Robust adoption of the company’s software and subscription-based offerings is likely to have acted as a tailwind.

Cisco’s revenues are likely to have benefited from momentum in web security, identity and access, as well as advanced threat and unified threat management security solutions, owing to higher cybersecurity spending on the back of continued remote/hybrid work set up globally.

Increasing adoption of the SecureX offering is likely to have contributed to the to-be-reported quarter’s performance.

Higher bandwidth requirements by customers are expected to have driven demand for Acacia’s optical solutions.

Strength in the company’s Catalyst 9000 and Nexus 9000 switch solutions is likely to have driven revenue growth in the Infrastructure Platforms segment. Accelerated 5G deployment and higher uptake of Wi-Fi 6 products and Meraki solutions may have acted as tailwinds.

Momentum in Cisco’s video conferencing application — Webex platform — induced by the coronavirus-induced remote-work setup and accelerated implementation of flexible work models, is expected to have supported fiscal second-quarter performance.

However, due to higher supply chain costs, the company expects to report non-GAAP gross margin in the range of 63.5-64.5% for the fiscal second quarter.

Increasing investments on portfolio expansion, product enhancements and acquisitions amid stiff competition in the networking infrastructure market are expected to have dragged down margin expansion in the fiscal second quarter.

Major Q2 Highlights

In December, Cisco announced that the Verizon Business was leveraging Cisco-managed SD-WAN services for its Network as a Service digitization strategy.

In October, Cisco debuted Webex Hologram, which is a new hybrid work collaboration tool that integrates the Webex meeting feature with immersive 3D holograms. Cisco also revealed that it has added several new functionalities to its Webex platform at the WebexOne 2021 event.

The company also noted that it was partnering with Bang & Olufsen to create the Bang & Olufsen Cisco 980 headset designed for hybrid-work innovation.

Moreover, Cisco unveiled new features for Webex to provide seamless experience to users amid hybrid-work innovation. The tech giant also added new advances to its Webex Customer Experience and Communications Platform as a Service (CPaaS).

What Our Model Says

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Cisco has an Earnings ESP of -0.22% but carries a Zacks Rank #2 currently. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are a few companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:

Keysight Technologies KEYS has an Earnings ESP of +2.17% and is Zacks #2 Ranked. You can see the complete list of today’s Zacks #1 Rank stocks here.

KEYS shares have underperformed the Zacks Computer & Technology sector in the past year.

Keysight returned 7.6% compared with the sector’s decline of 2.3%. The company is set to report first-quarter 2022 on Feb 17, 2022.

Applied Materials AMAT has an Earnings ESP of +0.93% and carries a Zacks Rank of 2 at present.

AMAT stock returned 13.6% in the past year. Applied Materials is set to report first-quarter 2022 results on Feb 16, 2022.

Fastly FSLY has an Earnings ESP of +2.36% and a Zacks Rank #2.

Fastly shares are down 73.6% in the past year. Fastly is set to report fourth-quarter 2021 results on Feb 16, 2022.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Cisco Systems, Inc. (CSCO) : Free Stock Analysis Report

Applied Materials, Inc. (AMAT) : Free Stock Analysis Report

Keysight Technologies Inc. (KEYS) : Free Stock Analysis Report

Fastly, Inc. (FSLY) : Free Stock Analysis Report

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