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Will Cisco Systems' (CSCO) Earnings Surprise this Season? - Analyst Blog

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Cisco Systems ( CSCO ) is set to report fourth-quarter fiscal 2014 results on Aug 13. Last quarter, the company posted a 7% positive surprise. Let's see how things are shaping up for this announcement.

Factors to Consider this Past Quarter

The company's third-quarter earnings beat the Zacks Consensus Estimate by 3 cents. Improving markets for the company's products in the United States and Europe and strong growth prospects in areas like cloud computing, mobile and data center aided earnings in the last quarter. Revenues of $8.8 billion decreased 7.8% year over year but increased 4.8% sequentially.

Also, the third quarter was strong for Cisco in terms of margin growth. This was mainly due to favorable product mix and higher volumes.

For the fourth quarter, Cisco expects revenues to increase in the range of 4% to 6% on a sequential basis. The company expects non-GAAP gross margin within 61-62%; non-GAAP tax rate of 21%, yielding non-GAAP earnings per share of 51 to 53 cents. The Zacks Consensus Estimate for the upcoming quarter is pegged at 48 cents.

Earnings Whispers?

Our proven model does not conclusively show that Cisco Systems will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 48 cents. Hence, the difference is 0.00%.

Zacks Rank: Cisco has a Zacks Rank #3 (Hold) which, when combined with a 0.00% ESP, makes surprise prediction difficult.

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

You could consider other stocks with a positive Earnings ESP and a favorable Zacks Rank such as:

Myriad Genetics Inc. ( MYGN ), with an Earnings ESP of +4.35% and a Zacks Rank #1 (Strong Buy).

Medtronic, Inc. ( MDT ), with an Earnings ESP of +1.09% and a Zacks Rank #2 (Buy).

Callon Petroleum Company ( CPE ), with an Earnings ESP of +5.56% and a Zacks Rank #2.

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CISCO SYSTEMS (CSCO): Free Stock Analysis Report

MYRIAD GENETICS (MYGN): Free Stock Analysis Report

CALLON PETE-DEL (CPE): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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