Cisco Earnings Preview: Another Surprise?

Cisco CSCO is scheduled to report fiscal third-quarter 2012 results on Wednesday, May 9 after the closing bell. Shares are currently trading around $19.80, approximately 7% lower than their 52-week high of $21.30.

The consensus forecast of analysts calls for Cisco to report quarterly earnings of $0.47 per share. That is equal to the consensus EPS estimate 60 days ago and would represent an increase from actual earnings of $0.42 in the same quarter last year. Note that Cisco's actual earnings have exceeded consensus EPS estimates by greater than 5% in each of the prior four quarters.

Analysts also expect the IT giant to report that revenues for the quarter rose 6.5% from third quarter last year to $11.58 billion. Analyst Matthew Robison of Wunderlich Securities told Benzinga that he believes Cisco's Revenues will be in line with consensus analyst estimates.

Robison also remarked that he thinks Cisco will continue its focus on improving margins. Possible means of achieving higher margins include acquisitions of software companies, which Robinson says he expects will remain the primary orientation of Cisco's acquisitions. Robison also says he does not believe Cisco's acquisitions in the next few months will be anything transformational.

The Company

Cisco provides networking products, other IT equipment, and services related to this equipment. The company produces technology products for both enterprises and individuals, and operates in five global segments: Japan, Emerging Markets, European Markets, Asia Pacific, and United States and Canada.

Performance

Cisco's P/E ratio is 15.37, far less than comparable firm Juniper Networks JNPR, which has a P/E of 35.05. This difference in price to earnings ratios can partially be attributed to differences in capital structure, with Cisco's equity carrying greater risk because of its greater D/E ratio. Currently, Cisco has a short interest of 0.8% of the float. Its return on equity is 14.75%. Of 46 analysts who rate the stock, 23 rate it a Buy, Outperform or Overweight, 2 rate it a Sell, and 21 rate it Neutral, Sector Perform, or Market Perform. The share price is more than 12% higher than a year ago, while competitor Juniper Networks declined more than 45% in the same period.

Read more about Cisco here.

Disclosure: At the time of this writing, I owned shares of Cisco Systems.