Should Cisco Stock Be in Your Portfolio Pre-Q4 Earnings?

Cisco Systems CSCO is set to release its fourth-quarter fiscal 2025 results on Aug. 13.

The company anticipates fourth-quarter fiscal 2025 revenues between $14.5 billion and $14.7 billion. Non-GAAP earnings are expected between 96 and 98 cents per share. 

The Zacks Consensus Estimate for revenues is pegged at $14.6 billion, indicating growth of 7.1% from the year-ago quarter’s reported figure. The consensus mark for earnings has been steady at 97 cents per share over the past 30 days, suggesting year-over-year growth of 11.5%. 

CSCO’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average being 3.94%. 
 

Cisco Systems, Inc. Price and EPS Surprise

Cisco Systems, Inc. price-eps-surprise | Cisco Systems, Inc. Quote

Let’s see how things are shaping up prior to this announcement.

Key Factors to Note for CSCO’s Q4 Earnings

Cisco’s fourth-quarter fiscal 2025 results are expected to have benefited from improved demand for networking products driven by switching, enterprise routing, webscale infrastructure, and industrial networking applications. AI-powered cloud managed Meraki for government networking solution achieved FedRAMP authorization from the U.S. government in the third quarter of fiscal 2025, which bodes well for the company’s federal business.

The Zacks Consensus Estimate for fiscal fourth-quarter Networking revenues is currently pegged at $7.19 billion, indicating 5.6% year-over-year growth.

Cisco’s strategy of infusing AI across Security platforms and developing Agentic capabilities across the portfolio is a key catalyst. In May, Cisco unveiled Duo Identity and Access Management (IAM) solutions that help enterprises fight continuing identity-based attacks. Duo IAM strengthens Cisco’s approach to user-friendly Zero Trust security.

In June, the company announced enhanced security solutions embedded deep into its networking infrastructure that will help companies implement zero-trust architectures. Cisco’s Hybrid Mesh Firewall and Universal Zero Trust Network Access solutions simplify policy management, enhance visibility and enable enterprises to scale securely.

The Zacks Consensus Estimate for fiscal fourth-quarter Security revenues is currently pegged at $2.2 billion, indicating 23.2% year-over-year growth.

CSCO Shares Outperform Sector

Cisco shares have appreciated 18.1% year to date, outperforming the Zacks Computer & Technology sector’s return of 12.7% as well as closest peers like Dell Technologies DELL and Hewlett Packard Enterprise HPE. While shares of Dell Technologies has returned 16.2%, Hewlett-Packard has declined 4.4%.

CSCO Stock’s Performance

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 4.67X, higher than the industry’s 4.37X, Dell Technologies’ 0.85X, and Hewlett Packard Enterprise’s 0.69X.

Price/Sales (F12M)

Cisco Rides on Strong Portfolio, Rich Partner Base

Cisco’s aggressive AI push and growing security dominance have been major growth drivers. Cisco secured AI infrastructure orders worth more than $1 billion to date in fiscal 2025, a quarter ahead of schedule. The momentum is expected to continue in the near term, thanks to an expanding portfolio and collaboration with NVIDIA NVDA. 

The company is expanding its AI portfolio for data centers with new solutions like the Unified Nexus Dashboard, Cisco Intelligent Packet Flow, configurable AI PODs and 400G bidirectional (BiDi) optics. Cisco’s expanded partnership with NVIDIA, under which the companies plan to offer solutions that help build AI-ready data center networks, is a game-changer.

Cisco’s rich partner base, which includes Meta Platforms, Microsoft, NVIDIA, Lenovo and ServiceNow, 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. The company is expanding its portfolio by unveiling AI factory architecture developed in collaboration with NVIDIA. This is expected to drive up Cisco’s AI-driven revenues.

Cisco deepened its partnership with ServiceNow, combining the former’s infrastructure and security platforms with the latter’s AI-driven platform and security solutions. The first integration brings together Cisco’s AI Defense capabilities with ServiceNow SecOps to provide more holistic AI risk management and governance.

Conclusion

Cisco’s near-term results are expected to benefit from an improving networking business and growing security business, along with a rich partner base. 

Cisco currently carries a Zacks Rank #2 (Buy), which implies that investors should buy the stock ahead of fourth-quarter earnings results. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research