CSCO

Cisco Faces Headwinds Due to Gross Margin Pressures

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Image Source: Cisco By Brian Nelson, CFA On February 11, Cisco (CSCO) reported better than expected results for the second quarter of fiscal 2026. Quarterly revenue of $15.3 billion increased 10% year-over-year, beating the consensus forecast of $15.11 billion, while non-GAAP earnings per share for the quarter came in at $1.04, up 11% year-over-year, and better than the consensus estimate of $1.02. The double-digit top and bottom-line growth exceeded Cisco’s guidance, and it was encouraging to see earnings advance faster than revenue in the quarter. Non-GAAP gross margin came in at 67.5%, down from 68.7% in last year’s quarter, while its non-GAAP operating margin was 34.6% in the quarter. Management had the following to say about the results: Cisco’s strong … Read more

Cisco Puts Up Solid First Quarter Fiscal 2026 Results

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By Brian Nelson, CFA On November 12, Cisco (CSCO) reported better than expected first quarter fiscal 2026 results with revenue and non-GAAP earnings per share exceeding the consensus forecasts. Revenue increased 8% year-over-year, while non-GAAP earnings per share of $1.00 increased 10% year-over-year, above the high end of its guidance range. Non-GAAP gross margin of 68.1% and non-GAAP operating margin of 34.4% were both above the high end of its guidance ranges. Cash flow from operating activities fell to $3.2 billion in the first quarter of fiscal 2026, a decline of 12% compared to the mark in the same period last year. Management had the following to say about the quarter: We had a solid start to fiscal 2026, and … Read more

Thinking Slow: 3 Research Blind Spots That Changed the Investment World

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Dear members: — Daniel Kahneman in his text Thinking, Fast and Slow (1) divided the human psyche into two systems. The first system is instinctive and emotional, often set on autopilot, while the second system is slower and more logical, requiring a calculating conscious. Many of the maxims the investment world takes for granted today suffer from conclusions that are made rapidly, almost without thinking, driven by our first system, creating what I call research blind spots. — In World War II, Allied bombing raids were suffering from very high casualty rates. It was estimated that for those pilots that were flying at the beginning of the war, only about 10% survived, a terrible loss rate. Bombing was crucial to the Allied … Read more

Your Role as a Choice Architect

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“As we’ve shown time and time again, you don’t need to look far to beat the market return (or, by comparison, to have a healthy diet). If something is not on the menu at Valuentum, it means the chef has something better cooking in the kitchen.” — Dear members: — Richard Thaler in his groundbreaking book Nudge (1), co-written with Cass Sunstein, talked about the role of the choice architect. A choice architect is basically someone or some organization that has the responsibility for organizing the context and content in which people make decisions. — A good example of a choice architect might be a cafeteria worker that has to decide how to organize the food in a buffet line … Read more

Cisco Systems Reports Strong Fiscal Fourth Quarter

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Image Source: TradingView By Brian Nelson, CFA On August 13, Cisco Systems (CSCO) reported better than expected fiscal fourth quarter results, with both revenue and non-GAAP earnings per share coming in ahead of consensus. Fiscal fourth quarter revenue was up 8% year-over-year, to $14.7 billion, while fiscal fourth quarter product orders advanced 7% year-over-year, with expansion across all geographies. Non-GAAP gross margin came in at 68.4% at the high end of its guidance range, while non-GAAP earnings per share of $0.99 was up 14% year-over-year, above the high end of its guidance range. Management had the following to say about the results and outlook: We delivered a strong close to fiscal 2025, driven by our accelerated innovation and solid execution. … Read more

3 Undervalued Stocks to Consider Buying Now

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Dear readers:   With the markets retracing most of their recent drawdown, we’re taking a victory lap as we didn’t panic, nor should have you. We highlighted our wait-and-see approach amidst the worst of the pullback, and we expect the Magnificent 7 (large cap growth and big cap tech) to continue to propel the markets higher, as they have done.   We’ve been busy rolling valuation models as we finetune our assumptions for a great number of companies under coverage. While doing so, we came across three undervalued stocks that are also included in the simulated newsletter portfolios. We think they’re prime for highlight.   The three stocks are UnitedHealth Group (UNH), Nvidia (NVDA) and Alphabet (GOOG). We spend a lot of time on discounted cash-flow valuation, … Read more

Cisco Raises Fiscal 2025 Outlook Again

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Image: Cisco put up excellent fiscal third quarter results. By Brian Nelson, CFA On May 14, Cisco Systems (CSCO) reported better than expected third quarter fiscal 2025 results, with both revenue and non-GAAP earnings per share coming in higher than the consensus forecast. Revenue increased 11% year-over-year, while non-GAAP earnings per share increased 9% year-over-year, to $0.96 per share, above the high end of its guidance range ($0.90-$0.92). Product orders expanded 20% from the same period a year ago (9% excluding Splunk), while AI infrastructure orders taken from webscale customers exceeded $600 million. Management had the following to say about the quarter: Cisco once again had strong quarterly results with clear demand for our technologies. The momentum we are seeing … Read more

Magnificent 7 Earnings Reports Not Bad Thus Far

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By Brian Nelson, CFA   Shortly after Trump’s Liberation Day, where the President unveiled lofty tariffs on numerous countries, we released our wait-and-see outlook for the equity markets, which thus far has proven to be the right move, with the markets largely recovering from the depths reached in April. The S&P 500 (SPY), for example, is down just 3.3% year-to-date, excluding dividends.   A lot has happened since Liberation Day, including easing of tariffs to a 10% baseline for most, if not all, countries, with the key exception of China, where tariffs remain extremely elevated and prohibitive. Many countries are now reportedly negotiating trade agreements with the White House, and we expect China to be added to that list soon, even if … Read more

Trump Tariffs Higher than Expected; What We’re Doing

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By Brian Nelson, CFA The Trump tariff increases came in larger than what we were expecting, and it remains to be seen how they will flow through the global economy, as we monitor potential retaliatory tariffs from other countries. As it relates to the equity markets, we’re taking a wait and see approach at the moment as we monitor new policy changes related to trade, immigration, fiscal (tax), and regulations. In short, we’re not overreacting to the sell off as we won’t have a great handle on the tariff impact to companies for a few quarters when they report results post-tariff increases. That said, we’re expecting continued market volatility, with meaningful risk to the downside, before trade uncertainty alleviates in … Read more

Cisco Ups Fiscal 2025 Guidance Again

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Image Source: Cisco By Brian Nelson, CFA On February 12, Cisco Systems (CSCO) reported strong fiscal second quarter results with a beat on both the top and bottom lines. Revenue of $14.0 billion advanced 9% on a year-over-year basis, above the high end of the company’s guidance range. Non-GAAP earnings per share increased 8% year-over-year, to $0.94 per share, also coming in above the company’s guidance range. Product orders were up 29% from the same period last year, while they advanced 11%, excluding Splunk. AI Infrastructure orders were more than $350 million, bringing the total for the first half of its fiscal year to roughly $700 million. Management was upbeat in the press release: Cisco’s strong quarterly results were driven … Read more