Cisco Falls Premarket Despite Q4 Beat, FY26 Guidance in-Line
Cisco Systems, Inc. (CSCO) kicked off the new year with a bang, posting impressive Q4 earnings per share (EPS) and revenue numbers that topped estimates. However, despite the strong results, the stock fell 0.6% premarket to $69.85, leaving investors scratching their heads. In this blog post, we’ll dive into the details of Cisco’s Q4 performance and explore what might be driving the dip in shares.
Q4 Earnings and Revenue
For the quarter ending October 30, 2022, Cisco reported EPS of $0.99, surpassing the consensus estimate of $0.96. Revenue came in at $14.7 billion, exceeding the expected $14.3 billion. The company’s AI infrastructure orders were a particular highlight, more than doubling its FY25 target.
FY26 Guidance
Cisco’s guidance for FY26 EPS of $4.00-$4.06 and revenue of $59-$60 billion matched expectations. The company also declared a $0.41 dividend, providing a further boost to investors.
Why the Dip?
So, why did Cisco’s shares fall despite the strong Q4 results and in-line guidance? There are a few potential reasons:
- Lack of Surprise: While Cisco’s earnings and revenue numbers were impressive, they didn’t exceed expectations by a wide margin. The company’s guidance for FY26 was in-line with estimates, which may have reduced the excitement among investors.
- Valuation: Cisco’s stock has been on a tear in recent months, up 21% year-to-date. As a result, some investors may be taking profits or re-evaluating the company’s valuation in light of the recent performance.
- Competition: The tech sector is highly competitive, and Cisco faces intense competition from other networking and infrastructure companies. Investors may be concerned about the company’s ability to maintain its market share and pricing power in the face of this competition.
Conclusion
Despite the dip in shares, Cisco’s Q4 performance was a strong one, with the company topping estimates and delivering impressive growth in AI infrastructure orders. The guidance for FY26 was in-line with expectations, and the dividend declaration provided a welcome boost to investors.
While the company’s valuation may be a concern for some, Cisco remains a leader in the networking and infrastructure space, and its strong performance is likely to drive long-term growth and profitability.
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