Earnings Previews: Cisco Systems, Nvidia

Technology

Published: November 16, 2021 10:58 am

This week’s earnings include a truckload of retailers. Two Dow Jones industrial stocks (Home Depot and Walmart) both beat expectations Tuesday morning. More retailer reports are due later this week.

After markets closed Monday, Bitfarms, IonQ and Lucid reported quarterly results. IonQ and Lucid saw bump in their share prices while Bitfarms was trading down. After markets close Tuesday and before they open on Wednesday, reports are coming from Lowe’s, Target, TJX and StoneCo.

Here’s a look at another Dow stock and a chipmaker set to report results after markets close on Wednesday. We also will have a look in a later story at three important retail stocks.

Cisco

Networking giant and Dow component Cisco Systems Inc. (NASDAQ: CSCO) has posted a share price gain of 43.4% over the past 12 months including a year-to-date increase of around 33%.

Like most tech companies that depend on a vast supply chain, Cisco’s ability to source what it needs is a bit of an overhang. Now that a work-from-home surge is essentially finished, will businesses continue to spend on cloud computing and network infrastructure? The company is looking at growth in its recurring revenue from subscriptions and that will be an important point in Wednesday’s report.

Analysts are mostly bullish on the stock, with 15 of 29 rating the stock a Buy or Strong Buy, and the other 14 have Hold ratings. At a recent price of around $57.60, the upside potential based on a median price target of $64 is 11%. At the high price target of $74, the upside potential is 28.5%.

For Cisco’s first quarter of fiscal 2022, analysts are expecting revenue of$12.98 billion, which would be a decline of 1.1% sequentially and an increase of 8.8% year over year. Adjusted earnings per share (EPS) are forecast at $0.80, down 4.2% sequentially but up by 5.3% year over year. For the full fiscal year, analysts currently estimate EPS of $3.43, up 6.5%, on revenue of $52.83 billion, up about 6.1%.

Cisco’s share price to earnings multiple for fiscal 2022 is 16.7. For fiscal 2023, the multiple to estimated EPS of $3.69 is 15.5, and for 2024 it is 14.6 times estimated EPS of $3.93. The stock’s 52-week range is $40.77 to $60.27. Cisco pays an annual dividend of $1.48 (yield of 2.58%). Total shareholder return for the past year is nearly 40%.

Nvidia

After a slow start to 2021, shares of Nvidia Corp. (NASDAQ: NVDA) have added about 140% to the share price. For the entire 12-month period since last November, the stock is about 125%.

The big story for Nvidia this year is its proposed $40 billion acquisition of Arm, the U.K. chip design powerhouse used by many other tech firms, including Apple. While anything but a slam dunk, the deal could still make it past regulators.

With rising interest in all things metaversical, Nvidia’s already there with a platform of its own dubbed Omniverse. Even if Apple and Meta/Facebook use their own platforms, Nvidia still has the graphics processors that are fundamental to the metaverse.

Of 42 analysts covering the stock, 35 have a Buy or Strong Buy rating on the shares, and another five have given the stock a Hold rating. At a price of around $300, the stock trades well above the median price target of $242.50. Based on a high target of $400, the upside potential is 33%.

For its third quarter of fiscal 2022, Nvidia’s revenue is forecast at $6.81 billion, up 4.7% sequentially and 44% year over year. Adjusted EPS are forecast at $1.11, up 6.4% sequentially and 52% year over year. For the full fiscal year ending in January, analysts are looking for EPS of $4.17, up 66.9%, on sales of $25.79 billion, up 54.7%.

Nvidia’s share price to earnings multiple for fiscal 2022 is 71.8. For fiscal 2023, the multiple to estimated EPS of $4.69 is 63.9, and for 2024, the multiple is 55.7 times estimated EPS of $5.38. The stock’s 52-week range is $115.67 to $323.10. Nvidia pays an annual dividend of $0.16 (yield of 0.05%). Total shareholder return for the past year is 122%.