Should Cisco Systems Stock be in Your Portfolio Pre-Q2 Earnings?

Cisco Systems CSCO is set to release its second-quarter fiscal 2025 results on Feb. 12.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.The company anticipates second-quarter fiscal 2025 revenues between $13.75 billion and $13.95 billion. Non-GAAP earnings are expected between 89 and 91 cents per share. The Zacks Consensus Estimate for revenues is pegged at $13.86 billion, indicating growth of 8.36% from the year-ago quarter’s reported figure. The consensus mark for earnings has been steady at 91 cents per share in the past 30 days, suggesting year-over-year growth of 4.6%.  Cisco Systems, Inc. Price and EPS Surprise Cisco Systems, Inc. price-eps-surprise | Cisco Systems, Inc. QuoteCSCO’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average being 4.14%.Let’s see how things are shaping up prior to this announcement.Key Factors to Note for CSCO’s Q2 EarningsCisco’s second-quarter fiscal 2025 results are expected to have benefited from improved demand for networking products. Strong demand for Nexus brand of data center switches and growing interest in CSCO’s 400 gig and 800 gig switches based on Silicon One.The Zacks Consensus Estimate for fiscal second-quarter Networking revenues is currently pegged at $6.663 billion, indicating a 6% year-over-year decline.In the fiscal first quarter, Collaboration product orders grew double-digits, driven by demand for devices and Cisco’s Cloud Webex Suite. The introduction of Webex AI Agent, AI Agent Studio, and Cisco AI Assistant features for Webex Contact Center is expected to have driven top-line growth.The consensus mark for Collaboration revenues is pegged at $1.004 billion, indicating 1.5% growth on a year-over-year basis.Cisco is benefiting from strong security growth, driven by robust demand for solutions like XDR, Secure Access and Multicloud Defense suites. The addition of Splunk has been a key catalyst.In first-quarter fiscal 2025, Security orders more than doubled year over year, driven by the advanced threat intelligence capabilities of Splunk.The Zacks Consensus Estimate for fiscal second-quarter Security revenues is currently pegged at $1.987 billion, indicating 104.2% year-over-year growth.CSCO Shares Outperform Sector, IndustryCisco shares have gained 24.5% in the trailing 12 months, outperforming the Zacks Computer & Technology sector’s appreciation of 20.7% and the Zacks Computer Networking industry’s return of 23.6%.CSCO Stock’s Performance Image Source: Zacks Investment Research However, Cisco stock is not so cheap, as the Value Score of D suggests a stretched valuation at this moment.In terms of the forward 12-month P/S ratio, CSCO is trading at 4.34X, higher than the industry’s 3.98X.Price/Sales (F12M) Image Source: Zacks Investment Research Cisco’s Prospects Ride on Strong PortfolioThe increase in AI-related workload presents a strong growth opportunity for Cisco, thanks to an innovative portfolio. Cisco’s aggressive investments in AI, cloud, and cyber security are noteworthy. It expects to surpass more than $1 billion in orders for fiscal 2025.Cisco 8000, with Cisco’s Silicon One G200, are scalable, programmable, low-power switches with advanced load balancing and observability, which makes them ideal for AI networks. These features are driving hyperscalers to adopt the Cisco 8000 for maximum power efficiency in their back-end AI training networks.HyperFabric, Cisco’s fabric-as-a-service solution, is expected to be available in early calendar 2025, further simplifying infrastructure deployment and management while providing real-time visibility into network performance.CSCO’s wireless innovations, with Wi-Fi 7 access points and built-in AI, offer secure and adaptable wireless connectivity. Integrated with Cisco Spaces, these solutions optimize and enable smart workplaces.CSCO’s software portfolio includes innovative platforms like AppDynamics for full-stack observability and Cisco SecureX for integrated security management. Its collaboration tools, such as Webex AI Agent, AI Agent Studio and Cisco AI Assistant for the Webex Contact Center, leverage conversational intelligence and automation to boost customer satisfaction and productivity.Rich Partner Base Boosts CSCO’s ProspectsCisco’s rich partner base, which includes Meta Platforms META, Microsoft, NVIDIA NVDA, Lenovo and AT&T T, deserves attention.CSCO’s collaboration with NVIDIA is helping to expand the former’s datacenter infrastructure portfolio. CSCO’s latest NVIDIA-powered AI server and AI PODs, integrated with NVIDIA’s AI Enterprise cloud-native software and managed via Cisco Intersight, simplify and de-risk AI infrastructure.ConclusionCisco’s near-term results are expected to benefit from an improving networking business and growing security business. An expanding portfolio and a strong partner base are key catalysts that can help CSCO shares appreciate in fiscal 2025.Cisco currently carries a Zacks Rank #2 (Buy), which implies that investors should start accumulating the stock ahead of the fiscal second quarter results. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Just Released: Zacks Top 10 Stocks for 2025Hurry – you can still get in early on our 10 top tickers for 2025. Handpicked by Zacks Director of Research Sheraz Mian, this portfolio has been stunningly and consistently successful. From inception in 2012 through November, 2024, the Zacks Top 10 Stocks gained +2,112.6%, more than QUADRUPLING the S&P 500’s +475.6%. Sheraz has combed through 4,400 companies covered by the Zacks Rank and handpicked the best 10 to buy and hold in 2025. You can still be among the first to see these just-released stocks with enormous potential. See New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AT&T Inc. (T): Free Stock Analysis Report Cisco Systems, Inc. (CSCO): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report Meta Platforms, Inc. (META): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks