Cisco Systems CSCO has seen its stock price sink roughly 3% over the last three months as investors decide what to make of the historic tech giant's future. Cisco is coming off a relatively solid fiscal third quarter and has made a string of acquisitions that set it up for a stronger future. But the question is should investors buy CSCO stock ahead of the firm's earnings release Wednesday?
Cisco's revenues climbed by 4.4% in Q3 to hit $12.46 billion, which just surpassed the Zacks Consensus Estimate. Meanwhile, the company's adjusted earnings popped 10% to $0.66 per share. The company's product division saw its revenues jump by 5% to $9.30 billion, with its application business up 19% and its security unit up 11%. Investors should note that Cisco's largest business, infrastructure platforms, experienced just a 2% to gain to reach $7.16 billion.
The company has tried to improve its outlook by investing in new revenue streams. Cisco is set to complete its fourth acquisition of the calendar year with its $2.35 billion plan to buy Duo Security that was announced earlier this month.
The firm's purchase of Duo should help the company expand its IT and data security businesses, which will only become more vital going forward. Investors should also note that CSCO just recently announced a new partnership with Google GOOGL . These are all good signs for the future, but what about the present?
Stock Price Movement
Shares of CSCO are up around 52% over the last three years, which outpaces the S&P 500's 34% climb. Over the last 24 months, Cisco has seen its stock price climb over 41%. Year to date, shares of CSCO have topped the S&P and its industry's average, up roughly 15%. However, the firm has experienced a ton of turbulence since the start of the year. With that said, at around $43.85, shares of Cisco sit just a few dollars below its five-year high.
Moving on, CSCO is currently trading at 16.7X forward 12-month Zacks Consensus EPS estimates. This marks a slight premium compared to its industry's 14.9X average, but also a small discount compared to the S&P's 17.2X. Diving a little deeper, Cisco stock has traded as high as 19.2X over the last year, with a one-year median of 16.8X.
The company's stock is currently trading well above its year-long low of 13.7X, which means its valuation picture is just a bit stretchered compared to where it has traded at over the last year. Plus, if we look back over the last five years, CSCO's valuation picture looks a bit worse.
The information tech behemoth is projected to see its Q4 revenues pop by 5.24% to hit $12.77 billion, based on our current Zacks Consensus Estimate. At the other end of the income statement, Cisco is projected to see its adjusted quarterly earnings come in at $0.69 per share, which would mark 13.11% year-over-year growth.
Investors should note that Cisco's EPS projection has remained flat over the duration of its fiscal fourth quarter, signaling that analysts' earnings sentiment hasn't changed. The company also has a strong earnings history, having topped or matched our estimates every quarter over the last seven years.
Cisco is currently a Zacks Rank #3 (Hold) and sports "C" grades for Growth, Value, and Momentum in our Style Scores system. The company is also currently trading near its 52-week high, which means investors might want to simply keep an eye on Cisco for now.
Cisco is scheduled to release its Q4 and fiscal 2018 financial results after the closing bell on Wednesday, August 15.
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