After the closing bell on Wednesday, tech prime Cisco Systems (CSCO – Free Report) reported robust fiscal 2019 first-quarter results. The networking giant topped estimates on both revenues and earnings and provided an upbeat outlook.
Results in Detail
Earnings of 68 cents per share outpaced the Zacks Consensus Estimate by a couple of cents and improved from the year-ago earnings of 55 cents. Revenues rose 8% year over year to a record $13.1 billion and edged past the estimated $12.87 billion. Robust results were driven by strong product sales across the board and all geographies. Notably, the networking-gear company reported its fourth consecutive quarter of growth following eight quarters of declines.
The networking leader’s transition from its traditional business of high-end switches and routers to high-growth areas such as security, the Internet of Things and cloud computing is clearly paying off. As a result, Cisco now expects revenue growth of 5-7% and earnings per share in the range of 71-73 cents in second-quarter fiscal 2019. The mid-point of both the ranges is above the Zacks Consensus Estimate of 4.82% for revenue growth and earnings of 71 cents per share.
If the networking giant could maintain its projected revenue growth throughout fiscal 2019, then it could top $50 billion in revenues for the first time in its history.
Buoyed by solid results and an encouraging guidance, Cisco shares rallied as much as 5% in after-hours trading on heavy volumes. The stock currently has a Zacks Rank #3 (Hold) and a VGM Score of B. Additionally, it belongs to a top-ranked industry (top 45%).
ETFs to Watch
ETFs having the largest allocation to this network giant will be in focus over the coming days. Investors should closely monitor the movement in these funds and grab the opportunity when it arises.
iShares U.S. Telecommunications ETF (IYZ – Free Report)
This fund follows the Dow Jones U.S. Select Telecommunications Index and offers exposure to 45 American companies that provide telephone and Internet products, services, and technologies. Cisco occupies the third position with 14.6% of the assets. The ETF has AUM of $501.9 million and trades in average daily volumes of 474,000 shares. It charges 43 bps in annual fees and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
