Cisco Systems Inc. (NASDAQ: CSCO) is scheduled to release its most recent quarterly results after the markets close on Wednesday. Cisco seems to be at a fork in the road with this earnings report. On one hand a strong showing could see a major breakout for shares, while a loss might reveal that Cisco will never recover to its dominance of the late 1990s.
The consensus estimates from Thomson Reuters are $0.60 in earnings per share (EPS) and $12.11 billion in revenue. The fiscal first-quarter of last year reportedly had $0.61 in EPS on revenue of $12.35 billion.
It’s worth pointing out that Cisco has moved beyond its business of routers and switches and effectively into cloud and security offerings. While this expansion is a natural move for the business, it does put Cisco in direct competition with some of the most powerful, deep-pocketed companies in the tech sector.
Looking at the dividend, Cisco has managed to keep raising that payout over time, and it still yields an impressive 3.4% or so. Investors do have to keep in mind that Cisco has now paid out almost $5.00 per share in dividends going back to the first substantial dividend of 2011. That same payout has also nearly risen fourfold since then.
24/7 Wall St. took two charts from the trailing 10 years, and Cisco has greatly underperformed from the selling depths of the market in 2009 and in recovering from its pre-recession peak. The Nasdaq has greatly outpaced Cisco, and this leaves some questions. If the likes of Intel and Microsoft have recaptured their highs from the dot-com and tech bubble of 1999 and 2000, why is Cisco at only half its value from then?
Considering this, a win in this earnings report could see a major breakout for shares. On the other hand, a loss could signal to more skeptical investors that Cisco might never recover.
Shares of Cisco were last seen at $34.10, with a consensus analyst price target of $35.73 and a 52-week range of $29.12 to $34.60.
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