Cisco Systems Inc. (NASDAQ: CSCO) is set to release its corporate earnings after the close of trading on Wednesday. Thomson Reuters has estimates of $0.49 earnings per share (EPS) and $12.18 billion in revenue, which would compare to $0.48 EPS and 11.59 billion in revenue a year ago. The analyst community remains somewhat muted on Cisco, although the consensus price target is up at $23.53, versus a recent pre-earnings price of $21.21 on the stock. Cisco’s 52-week trading range is $14.96 to $21.98.
Cisco’s stock chart offers a lot more than you might imagine with the stock within about 3% of its 52-week high. The $21.21 share price today compares to a 50-day moving average of $21.00, and that is only 1% less than the stock price. Cisco’s shares have faced serious resistance at $21.75 in March and April, and the April and May support has been around $20.25 to $20.40. We would say that Cisco has been in a narrow trading range of $20 to almost $23 for all of 2013. This could set the stock up for a new direction if there is a surprise.
Options volume is close enough to even on puts and calls to determine any solid options bias ahead of earnings. Our options review shows that options traders are braced for a share price move of up to about $0.70 to $0.75 in either direction.
Cisco has beat earnings for what may be seven or eight quarters now, but the shares have not always rallied because of guidance or because of other circumstances. Cisco remains somewhat in a turnaround and the concerns are out there that the recent down-talking by Juniper Networks Inc. (NYSE: JNPR) will not leave Cisco unscathed from spending sequestration and lower capital spending.
If Cisco offers guidance, it will compare to the Thomson Reuters coming quarterly report consensus at $0.51 EPS and $12.50 billion in revenue. The year (ending in July) is pegged at $1.99 EPS and $48.67 billion in revenue.
As far as valuations are concerned for this DJIA component, Cisco trades at only about 10.6 times expected earnings, and its dividend yield is 3.2%.
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