This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Cisco Grows Where Others Can't

NEW YORK ( TheStreet) -- With another quarter in the books for networking giant Cisco (CSCO - Get Report), it seems not a whole lot has changed, which for the company is a good thing. What this means is that for now seven consecutive quarters, Cisco has beaten its earnings estimates -- a pretty remarkable accomplishment considering how the entire sector has been ravaged by poor economic spending.

While this has caused rivals such as Hewlett-Packard (HPQ), F5 (FFIV) and Juniper (JNPR) to consistently underperform, Cisco continues to show growth where the competition have not.

Nonetheless, when discussing these accomplishments Wall Street remains broadly unimpressed. However this time, aside from exceeding expectations, Cisco also offered a much rosier outlook than many had anticipated. In terms of the stock, I think value investors would be wise to appreciate just how undervalued the shares are at current levels.

A Strong Start to Fiscal 2013

For the period ending in October, the network giant reported net income of $2.6 billion, or 48 cents a share on revenue of $11.9 billion. Not only was this enough to beat analysts' estimates of 46 cents per share, but the results also represented 11% profit growth.

Likewise, revenue also grew by 6% and exceeded street expectations of $11.77 billion.

However, challenges still remain in terms of the company's core routing and switching business, which continues to experience weak demand. On the other hand, the company enjoyed a strong showing in its services business with revenue growing year-over-year by 12%.

Cisco attributed the better-than-expected performance to some of its biggest U.S. customers, from which the company saw a 9% increase in orders -- helping offset continued weakness in Europe.

In terms of guidance, Cisco expects second-quarter earnings to arrive between 47 cents to 48 cents per share. The company also expects revenue to grow as high as 5.5% if it reaches the high end of its range of $12.1 billion.

The company has chosen to guide conservatively as has been the pattern for most of this year due to weak enterprise spending. Likewise, investors should expect the company to beat on these projections as it has done now for almost two years.

Where's the Love?

For as consistent as Cisco has been in its string of market-beating performances, the company can't seem to get any respect. It seems investors continue to doubt the company's ability to grow despite increasing profits in the recent quarter by double-digits. For this, Cisco's management deserves more credit than it has received of late. Despite persistent disrespect, the company remained focus on its execution while ignoring all of the noise.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
CSCO $27.90 -0.23%
PANW $168.33 0.31%
AAPL $112.07 0.42%
FB $94.48 0.23%
GOOG $654.15 1.20%


Chart of I:DJI
DOW 17,122.04 -9.82 -0.06%
S&P 500 2,014.89 +15.91 0.80%
NASDAQ 4,812.70 -25.9430 -0.54%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs