Cisco Systems (Nasdaq: CSCO) is set to report fiscal first quarter earnings on Wednesday, November 13, after the closing bell. The tech bellwether is expected to report earnings of $0.81 per share. I am pretty certain the company will beat its EPS estimate because it almost always does. Cisco is the king of beating earnings by a penny or two—they have been doing it for years. The question is, how will investors react to the earnings report? That is what really matters.
Heading in to the report there are some mixed signals from the daily and weekly charts. On the daily chart we see that the stock has rallied over the last month or so and that has put the stochastic readings in overbought territory. The indicators did make a bearish crossover on November 11.
One other thing we see on the daily chart is that the 10-day moving average just crossed bullishly above the 50-day moving average. This is usually a sign of a change in the trend.
Looking at the weekly chart we see a stock that has just hit an upwardly-sloped trend line that connects the lows from 2017 and 2018. That trend line is just above the 104-week moving average (two years of data).
We also see that the weekly stochastic readings have just moved out of oversold territory in the last few weeks. The indicators did a little double-dip over the last few months, but the momentum seems to have changed a little in the past week or so.
Looking at the fundamental indicators for Cisco, the company has performed pretty well over the last few years. Earnings have grown by an average of 9% per year over the last few years and they were up 19% in the fourth quarter. Sales have increased at a rate of 2% per year and were up by 5% in the fourth quarter.
Where Cisco is well above average are its management efficiency measurements. The return on equity is an impressive 35.9% and the profit margin is at 32.8%. Both of these figures are well above average.
If we combine the ROE, the profit margin, and the sales growth we get the SMR rating from Tickeron. For Cisco the rating is 20 and that indicates very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The best rating a company can get is a 1 and the worst rating is a 100. Cisco is in the top 20th percentile.
Another area where Cisco does well is the Valuation Rating. Cisco scores a 7 in this category and that indicates that the company is seriously undervalued in the industry. A rating of 1 points to the most undervalued stocks, while a rating of 100 points to the most overvalued stocks. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization.
The Tickeron Profit vs. Risk Rating for Cisco is 20, indicating low risk on high returns. The average Profit vs. Risk Rating for the industry is 72, placing this stock better than average.
One area of concern is the Tickeron PE Growth Rating. Cisco scores a 97, pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents. A rating of 1 indicates highest PE growth while a rating of 100 indicates lowest PE growth. Furthermore, the PEG ratio is (0.0) for CSCO, as compared to the industry average of (4.1).
As far as the sentiment indicators for Cisco, they run the gamut. Analysts' ratings are slightly skewed to the bearish side, the short interest ratio is skewed to the bullish side, and the put/call ratio is neutral.
CSCO moved above its 50-day moving average on May 25, 2023 date and that indicates a change from a downward trend to an upward trend. In of 30 similar past instances, the stock price increased further within the following month. The odds of a continued upward trend are .
The Momentum Indicator moved above the 0 level on May 16, 2023. You may want to consider a long position or call options on CSCO as a result. In of 84 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are .
The Moving Average Convergence Divergence (MACD) for CSCO just turned positive on May 11, 2023. Looking at past instances where CSCO's MACD turned positive, the stock continued to rise in of 49 cases over the following month. The odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where CSCO advanced for three days, in of 319 cases, the price rose further within the following month. The odds of a continued upward trend are .
The RSI Indicator demonstrated that the stock has entered the overbought zone. This may point to a price pull-back soon.
The Stochastic Oscillator demonstrated that the ticker has stayed in the overbought zone for 9 days. The longer the ticker stays in the overbought zone, the sooner a price pull-back is expected.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where CSCO declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
CSCO broke above its upper Bollinger Band on May 18, 2023. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
The Aroon Indicator for CSCO entered a downward trend on May 15, 2023. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is seriously undervalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (4.833) is normal, around the industry mean (8.930). P/E Ratio (17.986) is within average values for comparable stocks, (57.099). Projected Growth (PEG Ratio) (2.039) is also within normal values, averaging (2.141). Dividend Yield (0.031) settles around the average of (0.043) among similar stocks. P/S Ratio (3.768) is also within normal values, averaging (22.936).
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to consistent earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating well-balanced risk and returns. The average Profit vs. Risk Rating rating for the industry is 87, placing this stock slightly better than average.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. CSCO’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
a manufacturer of Internet Protocol based networking products and services related to the communications and information technology industry
A.I.dvisor indicates that over the last year, CSCO has been closely correlated with JNPR. These tickers have moved in lockstep 74% of the time. This A.I.-generated data suggests there is a high statistical probability that if CSCO jumps, then JNPR could also see price increases.
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