News and Views

The Official Blog of WhaleWisdom.com

Cisco Systems, Inc. (CSCO) has quietly put together an outstanding year, with shares of the networking company rising by over 23%. It has been quite the turnaround story for a company once heralded as a darling among investors in the late 1990s, and then nearly forgotten about over the past 2 decades. Sentiment for the stock appears to be shifting.

Investors seem to be upbeat about the company, with the stock ranking at 30 on the WhaleWisdom heat map, which is down from 7 in the third quarter. Still, it is a strong placement on the 100-company heat map. The heatmap tracks holdings of the top 150 hedge funds using the most recent WhaleScore calculation.

Strong Placement on the Heat Map

Of the 150 hedge funds tracked in the heat map, 29 hold the stock in their portfolio, and 3 hold the stock among their top 10. Meanwhile, 9 of the funds increased their holdings, while 15 decreased them. The declining number of funds holding the stock was one reason why the stock moved down in the ranking.

         (WhaleWisdom)

Over the fourth quarter, among total institutions, the total number of 13F shares decline by less than 1% to 3.33 billion. Additionally, 849 institutions were adding to their holdings, while 229 started new positions. Meanwhile, 990 funds were reducing their stakes while just 105 exited the stock altogether.

Quarterly Results Approach

It brings up a big question: what will investors be doing with the stock after the company reports results on May 15? Analysts estimate that Cisco’s fiscal third quarter 2019 earnings grew by 17.2% to $0.77 per share, while revenue is forecast to have increased by 5% to $12.9 billion.

The company has a history of beating analysts’ estimates. In the past eight quarters, Cisco has topped analysts’ revenue and earnings estimate 8 times. It makes for good odds that the company will beat those earnings estimates again.

It May Come Down to Guidance

It may then come to forward-looking guidance. For that, analysts estimate that revenue will rise to $13.3 billion, while earnings climb to $0.81 per share next quarter. Should the company deliver reliable results and provide strong guidance, it would seem likely that the stock will continue its higher trend this year, and possible that strong results will propel the stock up the WhaleWisdom heat map as investors buy the equity.

Cisco has been among the more significant turnaround stories of the last two decades. It’s hard to believe that despite the stock’s recent run, it shares are still trading at less than half their value of the late 1990s when the company had a market capitalization of about $500 billion, and now 20 years later sits at around $235 billion. Indeed, the stock still has a long way to go to return to its former glory.

 

This entry was posted on Monday, May 13th, 2019 at 9:17 am and is filed under Stock. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

Comments are closed.