We're in the midst of a historic earnings season. At the S&P's current October gains, the month is on track to be strongest monthly performance since 1974. Despite hand-wringing across a brutal summer, the S&P is now up about 2% on the year.
One of the hottest sectors has been networking. Across the past month, several networking stocks have been rebounding robustly from their summer lows. Here's a recap of the earnings season so far and what's to come in the networking sector.
Key networking earnings summary
Return Through Earnings Season
|Riverbed (Nasdaq: RVBD )||$0.21||$0.24||40%|
|F5 Networks (Nasdaq: FFIV )||$0.98||$1.06||26%|
|Juniper (NYSE: JNPR )||$0.28||$0.28||30%|
Source: Earnings.com and Google Finance.
Of the companies above, both Riverbed and F5 Networks smoked earnings estimates and saw their shares surge the following trading days. Juniper didn't deliver blowout earnings but has seen its shares soar over the past week amid general market optimism.
What's causing networking stocks to take off? For one thing, the group has been absolutely crushed across the summer. Stocks like Riverbed and F5 Networks are still well off their 52-week highs, so their recent gains are more a reflection of how far the stocks had fallen.
The 800-pound gorilla of networking, Cisco, is still set to report on Nov. 9. Analysts are expecting $0.39 per share in earnings, a drop from $0.42 from the year-ago quarter. Later in November, one of the only networking stocks to issue strong earnings during the summer, Aruba Networks (Nasdaq: ARUN ) , is set to report as well.
They key consideration around networking is the IT spending environment. IT organizations froze spending during the summer amid the United States' debt stand-off and a cloudy macroeconomic picture. Especially for high-growth networking stocks, the fear was that spending would crimp "nonessential" networking purchases. However, as we're seeing from Riverbed and F5's results, not only is IT spending staying strong, but their products have become essential to large companies around the world and demand should continue to hold up in the face of economic headwinds.
That's it for the networking earnings season recap. To stay updated on any of the companies listed here, add them to your watchlist by clicking the "+" sign next to the respective tickers. Don't have a watchlist yet? You can start one for free.