Networking major Cisco Systems (CSCO) surpassed analysts’ revenue and earnings estimates in the first quarter. Despite the uncertain macroeconomic environment, the company has also raised its guidance for fiscal 2023. Thus, it could be wise to buy this tech stock like there’s no tomorrow. Read more….
Tech stocks endured a challenging 2022 due to the Fed’s seven interest rate hikes. Over the past year, the tech-heavy Nasdaq Composite has declined 25.6%. San Jose, California- based tech major Cisco Systems, Inc. (CSCO) has gained 20.4% in price over the past three months and 14.5% over the past six months to close the last trading session at $48.88.
The stock’s outperformance can be attributed to its fiscal first-quarter results, where CSCO surpassed the consensus revenue and EPS estimates. Its EPS came 2.9% higher than analyst estimates, and its revenue beat the consensus estimate by 2.6%.
CSCO’s non-GAAP EPS of $0.86 was its second-highest quarterly non-GAAP EPS in history. The company delivered its largest quarterly revenue in its history. Its annualized recurring revenue (ARR) rose 7% year-over-year to $23.20 billion, while its product ARR increased 12% year-over-year.
CSCO’s software revenue in the first quarter rose 5% year-over-year, and its software subscription revenue rose 11% year-over-year. Its remaining performance obligations (RPO) rose 3% year-over-year to $30.90 billion, and product RPO increased 5% year-over-year.
Within product revenue, Secure, Agile Networks’ revenue rose 12% year-over-year to $6.68 billion, End-to-End Security increased 9% year-over-year to $971 million, and Optimized Application Experiences increased 7% from the prior-year quarter to $193 million.
On the other hand, Internet for the Future sales declined 5% year-over-year to $1.31 billion, while Collaboration revenue fell 2% from the prior-year period to $1.09 billion. Also, Other Products’ revenue decreased 47% year-over-year to $2 million. Services revenue was flat at $3.39 billion.
Post its first quarter earnings, CSCO Chair and CEO Chuck Robbins said, “These results demonstrate the relevance of our strategy, our differentiated innovation, and our unique position to help our customers become more resilient.”
In November, CSCO announced that it would incur a $600 million pre-tax charge associated with layoffs and restructuring of its businesses to capitalize on growth opportunities, looking to strengthen its enterprise networking, security, and platform offerings. Earlier this month, CSCO announced the laying off of 700 jobs.
For fiscal 2023, the company raised its guidance for revenue growth from the previously expected range of 4%-6% to 4.5%-6.5% year-over-year. CSCO has also upped its non-GAAP EPS guidance by 4.5%-6.5% year-over-year to $3.51-$3.58. For the second quarter, the company expects its revenue to grow between 4.5% and 6.5% year-over-year and its non-GAAP EPS to come between $0.84 and $0.86.
CSCO’s Chief Financial Officer Scott Herren said, “This, together with our significant backlog, strong RPO, and easing supply situation, provides us with great visibility and predictability and supports our increased full-year guidance,” he added.
CSCO pays a $1.52 per share dividend annually, which translates to a 3.11% yield on the current share price. Its four-year dividend yield is 2.98%. The company’s dividend payouts have grown at CAGRs of 2.78% and 5.55% over the past three and five years, respectively.
Here’s what could influence CSCO’s performance in the upcoming months:
On October 12, 2022, CSCO and tech giant Microsoft Corporation (MSFT) announced their partnership where CSCO and MSFT Teams will be able to run natively on CSCO Room and Desk devices, and CSCO will be a partner in the Certified for MSFT Teams program in the first half of 2023.
Through this partnership, CSCO is helping drive interoperability and is meeting its customers’ needs.
CSCO’s total revenue increased 5.7% year-over-year to $13.63 billion for the first quarter ended October 29, 2022. The company’s non-GAAP net income increased 2.1% year-over-year to $3.55 billion. Its non-GAAP EPS came in at $0.86, representing an increase of 4.9% year-over-year.
In addition, its non-GAAP operating income increased 1.1% year-over-year to $4.33 billion.
Favorable Analyst Estimates
Analysts expect CSCO’s EPS for fiscal 2023 and 2024 to increase 5.6% and 8.1% year-over-year to $3.55 and $3.84, respectively. Its revenue for fiscal 2023 and 2024 is expected to increase 5.7% and 4% year-over-year to $54.50 billion and $56.71 billion, respectively. It has surpassed Street EPS estimates in each of the trailing four quarters.
In terms of forward non-GAAP P/E, CSCO’s 13.78x is 29.6% lower than the 19.57x industry average. Likewise, its 10.72x forward EV/EBIT is 36% lower than the 16.74x industry average.
However, its 2.70x forward non-GAAP PEG is 70.5% higher than the 1.58x industry average. Also, its 3.68x forward P/S is 34.6% higher than the 2.74x industry average.
In terms of the trailing-12-month gross profit margin, CSCO’s 62.23% is 25.7% higher than the 49.53% industry average. Likewise, its 30.34% trailing-12-month EBITDA margin is 160% higher than the industry average of 11.67%. Furthermore, the stock’s 26.97% trailing-12-month EBIT margin is 307.3% higher than the industry average of 6.62%.
POWR Ratings Show Promise
CSCO has an overall rating of A, equating to a Strong Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. CSCO has a C grade for Value, consistent with its mixed valuation.
It has an A grade for Quality, in sync with its high profitability. Its 0.97 beta justifies its B grade for Stability.
CSCO is trading above its 50-day and 200-day moving averages of $47.47 and $46.11, respectively, indicating an uptrend. The company’s earnings and revenue beat analyst estimates in the first quarter. Moreover, the company has raised its guidance for fiscal 2023 on the back of easing supply chain constraints through fiscal 2023.
The company is witnessing solid demand across its segments, and its RPO (Remaining Performance Obligations) remains robust at nearly $31 billion. Therefore, given its robust financials, favorable analyst estimates, stable dividend payments, and high profitability, it could be wise to buy the stock now.
How Does Cisco Systems, Inc. (CSCO) Stack up Against Its Peers?
CSCO has an overall POWR Rating of A, equating to a Strong Buy rating. Check out these other stocks within the Technology – Communication/Networking industry with an A (Strong Buy) rating: PCTEL, Inc. (PCTI) and Extreme Networks, Inc. (EXTR).
CSCO shares were unchanged in premarket trading Monday. Year-to-date, CSCO has gained 3.42%, versus a 4.20% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
Your Company’s Responsible Guide to Staying Profitable in a Recession
Opinions expressed by Entrepreneur contributors are their own.
The recent trend of easy money and exorbitant valuations has skidded to a halt amid recent economic volatility. Understandably, many companies rode that wave as long as they could, but in doing so many prioritized growth over sustainability and sound leadership. Layoffs continue to ripple through the tech ecosystem, so employees both in this sector and elsewhere are feeling the consequences.
Having to let go of staff members is all but unavoidable in a company’s lifecycle, but there is always more that can be done to keep businesses afloat while preserving morale. Strategies can include responsible budgetary decision-making, thoughtful and prudent responses to external pressures and transparent dialogue with employees, to name a few. Such actions can help companies remain healthy, productive and profitable, even as they navigate challenging waters.
This is What You Need in Your 5-Year Marketing Plan
Opinions expressed by Entrepreneur contributors are their own.
We’ve all heard the interview question, “Where do you see yourself in five years?” Marketers routinely take that question and apply it to their marketing strategies. They figure out what they want to achieve and then develop actionable steps to get there. Keep in mind, these plans aren’t designed to be all-encompassing. They serve as a guidebook for different scenarios while getting the team thinking about what they’d like to accomplish long-term.
Your five-year plan is a way to build an overarching metric for how you’re doing — or how you plan to do over the next half-decade. There are many things to consider when building your plan — here are a few to look at carefully:
The 3 key buckets
A successful five-year marketing plan should fixate on three main questions:
- What assumptions can you make about the next five years within your company?
- What goals do you want to achieve?
- What are the metrics you’ll use to measure those goals?
Assumptions are what you think won’t change in the business over the next five years. For example, you might assume that you will continue using particular vendors or that packaging costs will remain stable. From there, you can determine your goals — like boosting sales by 50% or converting 10,000 new customers. The metrics that measure your progress might be units sold or your company’s market share. It’s essential to include both readily-accessible metrics — such as website views — and brand metrics that might be a bit harder to come by, such as the associations your customers have made with your products or company.
Importantly, there’s no “right” or “wrong” when it comes to answering these questions. Every business has its own vision, resources and position, which all influence its marketing strategy. The aim is to develop a plan that will produce the most desirable outcome for you, rather than worrying about what other businesses have the capacity to do.
Related: Use These 5 Steps to Create a Marketing Plan
Narrowing your focus
Just like consumer preferences, marketing tactics are constantly shifting. Social media demonstrates this well. Because social media platforms have skyrocketed over the past two decades, marketers no longer rely solely on traditional platforms such as print or television ads. And even within social media, things aren’t constant. TikTok has become one of the fastest-growing platforms, quickly overtaking Facebook.
With so many options, your marketing plan must keep a narrow focus. For some companies, TikTok doesn’t matter. They can’t yet measure the return they’re getting from the platform, so this isn’t exactly a feasible opportunity. Don’t be tempted to try everything or be everywhere. It’s a matter of isolating what you practically can use to give you the insights that will help you.
Two questions will help focus your strategy:
- How do your goals compare to last year?
- What are you striving for (e.g., enhancing the brand vs. increasing brand awareness)?
How you answer those questions will help you identify where and how to focus your efforts so you don’t get lost in a bunch of small, irrelevant tactics.
Using your budget
Most people think of budgets as being stable or hard data — but almost all companies work with unknowns. In reality, the best they can do is come up with an educated guess that seems to make sense – a ballpark range. Because nobody can plan with certainty for every scenario — and because it’s so easy to become overwhelmed with an infinite range of outcomes — it’s advisable to lean on a few key financial assumptions and build a strategy around those.
Once you have a budget figure to work with, create high and low projections for everything you want to do. Let’s say the aim is to get to 50% brand awareness. What would your plan look like if you exceeded that and got to 75%? Alternatively, what would you do if awareness went down to 25%? Creating these high and low projections will let you design a more flexible approach and avoid being caught too off guard.
As you come up with your main scenarios and high-low projections, think about the key internal drivers you’ll need to address next year. Consider the risks, and assess whether you’ll have the data, technology and skills to develop and maintain what you expect to put forward. Keep in mind that it’s more important to pivot when issues come up than to predict what’s going to happen accurately.
Related: 4 Tips for Developing a Marketing Plan That Will Actually Grow Your Business
Paint flexibly within your broad strokes
A five-year marketing plan paints a broad, long-term picture of how you’ll communicate with your audience while giving details about your projected products or services. It includes assumptions and factors that aren’t necessarily static, so you have to approach it with a grain of salt and be ready to shift gears if the plan doesn’t work.
Even so, if you stick to three key buckets (assumptions, goals and metrics), keep your tactical focus narrow and incorporate multiple projections in your budget, you should end up with a strategy that blends the data and flexibility needed to strive in a changing world. Because annual marketing plans need to connect to your long-term marketing vision, let the annual marketing meetings serve as check-in points to keep your longer-term marketing plan relevant and viable.
Lauren Sánchez Is Heading to Space on a Girls Trip
Sorry, Jeff — this one is for the girls.
Jeff Bezos’ girlfriend, Lauren Sánchez, said in a new interview with the Wall Street Journal that she planned to take an all-female trip to space with the Amazon founder’s space manufacturing company, Blue Origin.
Five women will join her on the journey.
“It’s going to be women who are making a difference in the world and who are impactful and have a message to send,” she told the outlet.
The mission is set for early 2024, and the passengers’ names will be announced at a later date.
The WSJ’s report was Sánchez’s first solo interview, the outlet noted, since her relationship with Bezos went public in 2019, shortly after his divorce announcement from now ex-wife, MacKenzie Scott.
The interview also talks about Sánchez’s relationship with Bezos and the business advice he’s given her (keeping meetings under an hour, speaking last as a boss).
Sánchez is a former broadcast journalist and a helicopter pilot who founded her own filming company Black Ops Aviation, per Insider.
“Right now, I’m immersing myself in philanthropy and strategic giving,” she told the outlet. She also has a new production company, Adventure & Fellowship.
Bezos and Sánchez also work together on picking the winner for the Bezos Award for Courage & Civility, which was awarded to Dolly Parton in 2022, giving her $100 million to dole out to charities as she pleased.
But don’t expect Bezos to crash the girls’ trip. “He’ll be cheering us all on from the sidelines,” Sánchez said, adding that Bezos is “excited to make this happen with all of these women… He’s very encouraging and excited, and he’s thrilled we’re putting this group together.”
Sánchez’s nonprofit work includes This Is About Humanity, which helps give supplies to kids separated from their parents at the U.S.-Mexico border, supporting the Bezos Earth Fund, which fights climate change, and working with the Bezos Academy, a system of free Montessori schools.
Bezos told CNN in an exclusive that aired in mid-November that, like many other billionaires have pledged to do, he would give away most of his money.
Ex-wife Scott, meanwhile, has donated over $14 billion since 2019, much of it coming from the settlement with Bezos.
Bezos has always planned on giving his money away, Sánchez told the outlet.
“Jeff has always told me since I’ve known him that he’s going to give the majority of his money to philanthropy,” she said.
- John Abraham, Shah Rukh Khan call each other ‘uncle’ in old Pepsi ad. Watch | Bollywood
- Your Company’s Responsible Guide to Staying Profitable in a Recession
- Casey Wilson and Husband David Caspe Welcome Baby No. 3 Via Surrogate
- Pathaan actor Rachel Ann Mullins on co-star SRK: ‘I didn’t know who he was’ | Bollywood
- Camila Mendes Reveals Why Her New Relationship Is Unlike Any Other
Entertainment20 hours ago
Rita Ora On Tessa Thompson Taika Waititi Throuple Rumor
Social Media1 week ago
Meet the actor Shanu Bhutto
Technology1 month ago
The Benefits of Application Security: How It Can Help You Protect Your Business
Social Media2 weeks ago
Meet Devam Divecha is a Young Successful Musical artist, Rapper and Famous Singer in India
Social Media2 weeks ago
From online movie promoter to director: Suhail Shaji’s journey is also cinematic
Politics7 months ago
Maharashtra political emergency
Social Media2 weeks ago
Meet the digital influencer and marketer; Alex Chungath
Cryptocurrency2 weeks ago
An ace professional taking over the world of Forex and Trading