Cisco Programs (NASDAQ:) experiences their fiscal Q2 ’25 outcomes after the closing bell on Wednesday, February twelfth, 2025.
Analyst consensus is on the lookout for $0.91 in earnings per share on $13.87 billion in income and $4.5 billion in working revenue, for anticipated y-o-y development of 5%, 7% and eight% respectively.
After 4 consecutive quarters of adverse y-o-y development because of stock points, if Cisco income does develop 8% y-o-y on this Q2 ’25 quarter, it is going to be one of the best quarter of y-o-y income development since October ’23.
Full-year anticipated ’25 income and EPS is at the moment forecast to be $55.99 billion and $3.66 in EPS, for anticipated full-year development of -2% and +1%. (Once more, popping out of this networking stock correction, and with straightforward compares, Cisco has seen a plethora of unhealthy information the previous few quarters.)
The networking big does have straightforward compares over the subsequent three quarters too.
The chart:
Probably the most compelling facet to Cisco is the chart. The inventory is testing it’s December 30 ’21 post-2000 excessive of $64.28 on December 30 ’21.
In the course of the 2022 correction / bear market, (no matter you want to name it) Cisco fell from $64 to $40, however has recovered properly since.
Cisco’s all-time-high print was $84 in April, 2000. If the inventory ought to commerce above $64.28 after Wednesday night time’s earnings, Cisco may have reached it’s highest value stage since that $84 print in April, 2000.
Cisco EPS estimate revisions:
Cisco’s EPS estimate revisions reveals fiscal EPS peaking in late ’23, bottoming in the summertime of ’24, and slowly rising since.
Cisco’s income estimates peaked close to $59 billion per yr in late ’23, and now hover round $55 – $56 billion for the 2025 fiscal yr.
Valuation:
At $63 per share, Cisco is buying and selling at 15x – 16x anticipated ahead EPS, for anticipated common EPS development the subsequent three years of 5%, on 3% common income development. Buying and selling at 4.75x income and – properly price-to-book- isn’t that significant, Cisco’s price-to-cash-flow and price-to-free-cash (per share) is 21x and 24x respectively.
Since this weblog has been writing about earnings high quality and methods to decide an organization’s earnings high quality, CSCO’s cash-flow and free-cash-flow (FCF) versus the trailing twelve month (TTM) internet revenue stays beneath 100%, however that’s with this stock correction that has plagued Cisco the final 4 quarters. Previous to that interval, Cisco’s TTM cash-flow and FCF had been above 100% properly.
Morningstar assigns a $50 truthful worth marker on Cisco, and possibly extra attention-grabbing assigned a “huge moat” score to the networking big after years of a slender moat.
This weblog assigns a present truthful worth estimate on Cisco of $70, with the mannequin based mostly on a ahead 4-quarter EPS estimate and an anticipated a number of. This truthful worth estimate is extra unstable than Morningstar’s because the ahead EPS estimates are always in flux.
Abstract / conclusion:
The bull and bear case for Cisco appears straight-forward after the $24 billion Splunk (NASDAQ:) acquisition. The acquisition expands Cisco’s safety (cybercrime) division to now being 15% of complete income, after the safety section struggled for years within the mid-single-digits as a share of complete Cisco income and annual income development.
The networking division which is 50% of Cisco’s complete income and is actually the legacy enterprise from the 1990’s has had a tricky 4 quarters, with networking income income falling from a peak of $9.5 billion in July ’23 to October ’24’s quarterly networking income of $6.75 billion.
Cisco just isn’t immune from the AI frenzy both: as a plus Cisco had $300 million in AI orders in fiscal Q1 ’25, and is on-track, per the convention name notes to e-book a $1 billion in orders in fiscal ’25.
Cisco requires extraordinary persistence to be a shareholder: as was famous within the November ’24 Cisco earnings preview, Cisco has returned slightly over 2% per yr for shareholders since Jan 1, 2000, however +9.5% since January 1, 2010, each underperforming the SP 500.
One other constant theme this weblog has been speaking about with readers and purchasers, is shares like Cisco being “non-correlated” to the megacap 7 and megacap 10 names, and in addition to the semiconductor management, which you’d count on to conclude that the inventory would maintain it’s worth higher in any bear market, and even nasty correction, because it’s not essentially a crowded commerce, or a part of the momentum buying and selling group, nonetheless that wasn’t the case in 2022. Cisco fell 28% between January 1 ’22 by means of July 31, ’22, greater than half the SP 500’s drop.
A inventory that underperforms in each and bear markets – even corrections – turns into maddening to carry for purchasers.
Pay attention for the AI metrics as properly Splunk numbers for this fiscal Q2 ’25.
Expectations are low for the quarter for Wednesday night time’s launch, and the inventory is poised to commerce at it’s highest stage since late ’21, and previous to that, late 2000, early 2001.
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None of that is recommendation or a advice, however solely an opinion. Previous efficiency is not any assure of future outcomes. Investing can and does contain the lack of cash even for brief durations of time. All Cisco eps and income information is sourced from LSEG.
