Why Cisco Systems (CSCO) Is Up in After-Hours Trading Today

NEW YORK (TheStreet) -- Cisco Systems  (CSCO) rose in after-hours trading on Wednesday after the company reported third-quarter results that surpassed analysts' expectations.

Cisco reported a slight year-over-year decline in adjusted net income to $2.6 billion from $2.7 billion. The company posted adjusted earnings of 51 cents cents a share, which surpassed analysts' expectations of 48 cents a share.

Cisco also noted revenue of $11.5 billion down year over year from $12.2 billion, which beat the consensus estimate of $11.38 billion.

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The stock was up 4.25% to $23.78 in after-hours trading.

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Separately, TheStreet Ratings team rates CISCO SYSTEMS INC as a "buy" with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate CISCO SYSTEMS INC (CSCO) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, increase in stock price during the past year, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • CISCO SYSTEMS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CISCO SYSTEMS INC increased its bottom line by earning $1.86 versus $1.49 in the prior year. This year, the market expects an improvement in earnings ($1.99 versus $1.86).
  • Despite currently having a low debt-to-equity ratio of 0.31, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that CSCO's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.42 is high and demonstrates strong liquidity.
  • The gross profit margin for CISCO SYSTEMS INC is rather high; currently it is at 64.07%. Regardless of CSCO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CSCO's net profit margin of 12.78% is significantly lower than the industry average.
  • You can view the full analysis from the report here: CSCO Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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