Cisco Systems Inc. (NASDAQ: CSCO) is set to report earnings on Wednesday after the closing bell. This matters because it is the leader in networking and communications equipment, and it also matters because it is a Dow Jones Industrial Average component. Shares were trading marginally higher in Wednesday morning trading, and we believe this is because the bar likely is set very low for Cisco’s formal earnings and sales expectations.

Thomson Reuters has estimates of $0.51 in earnings per share (EPS) and $12.36 billion in revenue for Cisco. That would represent about 6% EPS growth and about 4% sales growth. We would be quick to point out that Cisco has managed to beat its formal EPS estimates for at least four quarters in a row.

The consensus estimates for the coming quarter are $0.52 EPS and $12.6 billion in sales. That represents only about 2% in EPS growth and 4% in sales growth.

It was a long time ago that John Chambers conceded that Cisco’s growth would be dependent on global GDP growth. With weakness from International Business Machines Corp. (NYSE: IBM) and in EMC Corp. (NYSE: EMC), we expect that the analysts have lowered expectations enough that the bar is set very low here.

Cisco’s market cap is now more than $127 billion, and its valuations are very reasonable. The stock is valued at 11.3 times expected earnings and 2.5 times expected sales.

At a stock price of $23.80, its 52-week range is $16.69 to $26.49. The Thomson Reuters consensus stock price target from analysts is up at $26.51, implying more than 11% upside. Then there is that 2.85% dividend yield to consider.

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