Cisco Systems Beats Up on Analysts Yet Again (CSCO)

Cisco Systems Beats Up on Analysts Yet Again

Cisco Systems (Nasdaq: CSCO ) reported earnings yesterday. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Jan. 28 (Q2), Cisco Systems beat expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue grew and GAAP earnings per share increased significantly.

Margins increased across the board.

Revenue details
Cisco Systems logged revenue of $11.53 billion. The 36 analysts polled by S&P Capital IQ expected revenue of $11.23 billion. GAAP sales were 11% higher than the prior-year quarter's $10.41 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Non-GAAP EPS came in at $0.47. The 39 earnings estimates compiled by S&P Capital IQ predicted $0.43 per share on the same basis. GAAP EPS of $0.40 for Q2 were 48% higher than the prior-year quarter's $0.27 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 61.3%, 50 basis points better than the prior-year quarter. Operating margin was 23.7%, 600 basis points better than the prior-year quarter. Net margin was 18.9%, 430 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $11.47 billion. On the bottom line, the average EPS estimate is $0.45.

Next year's average estimate for revenue is $45.85 billion. The average EPS estimate is $1.77.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 10,310 members rating the stock outperform and 513 members rating it underperform. Among 2,070 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 2,000 give Cisco Systems a green thumbs-up, and 70 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Cisco Systems is outperform, with an average price target of $21.20.

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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool owns shares of Cisco Systems. Motley Fool newsletter services have recommended buying shares of Cisco Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment icon found on every comment.

Report this Comment On February 09, 2012, at 3:13 PM, BradReeseCom wrote:

Hi Seth,
What's your take on Cisco's historical financial statements confirming an -$809 million discrepancy in security sales:
According to Cisco's historical financial statements, Q2'FY12 security sales were actually down -6.96% year-over-year, not up +24% as shown in its new statements.
Where did the -$809 million discrepancy go?
Note: Cisco did not respond to my repeated requests for clarification, nor did Cisco clarify the -$809 million discrepancy in its Q2'FY12 earnings call nor its Q1'FY12 earnings call.
http://www.bradreese.com/blog/2-8-2012.htm
Furthermore, Airespace cofounder and CTO Pat Calhoun has left Cisco for McAfee:
http://www.bradreese.com/blog/2-8-2012.htm#comment-434254083
Sincerely,
Brad Reese