Technology equipment giant Cisco Systems (CSCO) is slated to release Q3 results tonight after the bell with a conference call which should begin around 4:30 p.m. ET.
As it stands the Capital IQ Consensus Estimate calls for Q3 EPS of $0.77 (vs $0.66 a year ago) on revenue growth of 3.4% to $12.89 billion.
Guidance for Q3 calls for EPS of $0.76-0.78 on revenue growth of of +4-6% to approximately $12.91-13.2 billion.
Given that CSCO typically guides in the press release it may be prudent to see where the Street is on this next quarter; as it stands, the Capital IQ Consensus Estimate for Q4 calls for EPS of $0.81 on revenue growth of 3.5% to $13.29 billion.
There was another troubling sign in last quarter's print that some may have picked up on, and that is that CSCO continues to leverage cash on hand to prop up earnings. Specifically, the company both upped its quarterly dividend three months ago and announced a $15 billion increase to its stock repurchase authorization. Now, while these items are good sign for shareholder returns, the lower share count and the company's dividend payment impact the bottom line. It's difficult to say how healthy any EPS beat is in CSCO's current climate given the company's ability to continually pay shareholder returns and lower its share count.
On the top line CSCO is likely to see some growth as a result of the lapping of its change to 606 accounting measures, the Duo and Broadsoft deals, as well as price hikes through tariffs. We'd point out that last quarter, 4.7% revenue growth -- a modest beat on Street expectations -- was enough to push the stock higher over the following months (juxtaposed against a push to highs in the broader market/broader tech sector).
CSCO comes into the print with a nearly $232 billion market capitalization and trades at roughly 16.1x forward earnings estimates vs peers Juniper Networks' (JNPR) 14.0x, Arista Networks' (ANET) 26.3x, and F5 Networks' (FFIV) 14.0x multiples. A week after the Q2 print the stock formed a golden cross with the shorter term 50-day SMA (54.28) pushing above the longer term 200-day (48.17), allowing the stock to soar to better than 18-year highs. Action has quieted down in the past four weeks, though, with the shares down about 8% since topping those highs.
CSCO Is just a bellwether to watch and does not represent a trade Id take.