Networking hardware company Cisco Systems (NASDAQ:CSCO) is set to report its fiscal fourth-quarter results after the market closes on Aug. 15. Revenue is expected to grow for the third straight quarter, with adjusted earnings following suit. The company has benefited from strong adoption of its subscription-based Catalyst 9000 switching platform, as well as double-digit growth in applications and security. Those trends should continue in the fourth quarter.

What analysts are expecting

Cisco expects its fourth-quarter revenue to grow by 4% to 6% year over year. The average analyst estimate calls for revenue of $12.77 billion, representing growth of 5.2%. Cisco's guidance includes the expectation that its routing and service provider video businesses will continue to show some weakness, with the rest of portfolio picking up the slack.

Cisco's Catalyst 9000 switches.

Cisco's Catalyst 9000 switches. Image source: Cisco.

The Catalyst 9000 platform will be a key driver of this growth. CFO Kelly Kramer discussed demand for the company's newest switches in the third-quarter earnings call: the Cat 9K, the demand is great. We have fantastic demand. We are taking orders like crazy and there's great adoption out there by our customers that we don't see slowing down, so we feel great about that. But again, there's a lot of moving parts and we'll take it one quarter at a time.

Cisco expects its non-GAAP earnings per share to come in between $0.68 and $0.70 in the fourth quarter. That range straddles the average analyst estimate of $0.69 per share, and it's up from $0.61 per share in the prior-year period.

Share buybacks will act as a significant driver of earnings growth, thanks to the company's massive $25 billion buyback program announced earlier this year. The company has spent more than $11 billion on share buybacks in the first nine months of the fiscal year, and rapid-fire buybacks will likely continue until the $25 billion authorization is exhausted. Cisco's third-quarter diluted share count was down about 4% from the prior-year period.

Security growth

Cybersecurity is one of Cisco's long-term growth engines. The business is small right now -- the $1.73 billion in security revenue through the first nine months of the fiscal year accounted for less than 5% of Cisco's total revenue. But it's growing much faster than the company as a whole, racking up 11% year-over-year growth in the third quarter.

Acquisitions are driving some of that growth, and Cisco isn't taking its foot off the gas on that front. The company announced the $2.35 billion acquisition of Duo Security earlier this month. Duo focuses on unified access security and multifactor authentication delivered through the cloud, and Cisco plans to integrate Duo's products with its network, device, and cloud security platforms.

The Duo acquisition comes after a handful of other security acquisitions in the past few years, including Observable Networks, CloudLock, Lancope, Portcullis, and OpenDNS. Cisco has also made plenty of acquisitions outside of security, in areas including artificial intelligence and contact center solutions.

CEO Chuck Robbins explained the company's security success in the third-quarter earnings call:

I think that as you look at the architecture that we have, which extends from email to end points, to the network, to the cloud, and then has this massive state machine where we can correlate threats and then dynamically defend, it's a unique proposition. We say that we have this integrated architecture, but also best-of-breed products. Where we are convincing customers that the architecture is right, then we're winning.

Is Cisco a good investment?

Shares of Cisco may jump up or down depending on its fourth-quarter results, but day-to-day fluctuations shouldn't matter to long-term investors. Based on the average analyst estimate for full-year non-GAAP earnings, the stock trades at a price-to-earnings ratio of about 17. Add in a dividend yield of about 3%, and you have a reasonably priced dividend stock.

Cisco's core switching and routing businesses are sensitive to the state of the global economy. If customers start delaying purchases due to uncertainty or an economic slowdown, it will hurt the company's results. But in the long run, I think Cisco's dominance of the switching and routing market and the growth potential of its smaller businesses like security make it a solid investment.