Cisco is 'more reasonably priced' after Q1 earnings

2023-11-15 18:02:37 ET

Cisco Systems Inc (NASDAQ: CSCO) is down 10% in extended hours even though it reported market-beating results for its fiscal first quarter.

Why is Cisco stock down in after-hours?

The stock is being punished primarily because the networking hardware company issued disappointing guidance for the full year.

Cisco is now calling or $3.87 to $3.93 of adjusted per-share earnings this year on up to $55 billion in revenue. Analysts, in comparison, were at $4.05 a share and $57.76 billion, respectively. Still, Barbara Doran – the Chief Investment Officer of BD8 Capital Partners said today:

That (commentary about H2 rebound) was interesting because one of the concerns was that an H2 slowdown was likely and the company had been talking about that. So, that’s a reversal.

The earnings release arrives a couple months after Cisco Systems announced plans of buying Splunk for $28 billion ( find out more ). Its shares are now trading below the price at which they started 2023.

Watch here: https://www.youtube.com/embed/S8nbreeGg1I?feature=oembed

Cisco reports a slowdown in new orders

Cisco noted a slowdown in new product orders in Q1 as its clients continued to install products that were delivered to them over the past three quarters.

A couple quarters of shipped products, as per the Nasdaq-listed firm, are pending implementation. On CNBC’s “ Closing Bell: Overtime ”, Doran added:

There was also an expectation that the backlog would be largely worked down by the end of this quarter. That seems not to be happening. It’s going much slower.

Other notable figures in the earnings report include a 9.0% annualised growth in product revenue and a 4.0% increase in services revenue.

Want to see a crazy trade?

Yesterday, someone OPENED $SPLK 127 calls, for $22,000, expiring tomorrow.

Then today Cisco Systems $CSCO announced acquiring Splunk for $28B, $SPLK up 20%.

The contracts were $0.04 yesterday, now $18.30.

They exited today for a 45,650% return… pic.twitter.com/uP6BnNzscp

— unusual_whales (@unusual_whales) September 21, 2023

Notable figures in Cisco Q1 earnings release

• Earned $3.64 billion versus the year-ago $2.67 billion
• Per-share earnings also increased from 65 cents to 89 cents
• Adjusted EPS printed at $1.11 as per the press release
• Revenue jumped 7.6% year-over-year to $14.67 billion
• Consensus was $1.03 a share on $14.61 billion revenue
• Gross margin improved 400 basis points in fiscal Q1

On Wednesday, the tech company also declared 39 cents a share of quarterly dividend. According to Charlie Bobrinskoy of Ariel Investments, Cisco stock is “more reasonably priced” compared to peers.

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