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

The Market Is Waking Up to Cisco

Leopold's mention of margins was also noteworthy, which suggests increased profitability while Cisco endeavors to build its SDN business. Leopold was proven right as Cisco just posted a solid first-quarter gross margin of 61.4%, which indicates the company's strong competitive leverage against the likes of F5 Networks (FFIV) and Juniper (JNPR) remains steady.

Elsewhere, revenue surged 5.4% to $12.2 billion, which led to a non-GAAP net income of $2.7 billion, which represents year-over-year growth of 4.7%, or 51 cents per share -- topping Street estimates of 49 cents. John Chambers, Cisco's CEO said that the company managed to execute "in a slow, but steady economic environment."

In other words, amid such periods of turbulence with weak carrier spending and soft enterprise IT environment that has not fully rebounded to more robust levels, Cisco still managed to outperform its rivals and exceed expectations. This is while amassing cash levels of more than $47 billion.

In fact, while analysts still model the stock for $25 to $30 per share, when applying a modest 4% to 5% free-cash-flow growth, the stock still supports a fair market value of about $35. (Shares were recently trading at about $23.50.) Cisco remains a strong buy. But if you've been reading me for a while, you would have already known this -- even though the Street is just now waking up to this idea.

At the time of publication, the author held no position in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Richard Saintvilus is a private investor with an information technology and engineering background and the founder and producer of the investor Web site Saint's Sense. He has been investing and trading for over 15 years. He employs conservative strategies in assessing equities and appraising value while minimizing downside risk. His decisions are based in part on management, growth prospects, return on equity and price-to-earnings as well as macroeconomic factors. He is an investor who seeks opportunities whether on the long or short side and believes in changing positions as information changes.
2 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 $22.89 0.00%
AAPL $94.02 0.00%
FB $104.07 0.00%
GOOG $683.57 0.00%
TSLA $162.60 0.00%


Chart of I:DJI
DOW 16,204.97 -211.61 -1.29%
S&P 500 1,880.05 -35.40 -1.85%
NASDAQ 4,363.1440 -146.4150 -3.25%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs