Cisco Systems Stock Looks Set To Bounce Back On Steady Earnings Growth

+12.73%
Upside
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Market
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CSCO
Cisco

Cisco Systems Inc. stock (NASDAQ: CSCO) is down almost 8% in the past month (21 trading days), underperforming the S&P 500 which was down a little over 2% over this period. If you look at the change over the last ten days, too, the stock has returned -1.7%, underperforming the broader market. However, earlier this week Cisco reported strong Q2 ’22 earnings (Cisco’s fiscal year ends in July), with revenue rising from $12 billion in Q2 ’21 to $12.7 billion in Q2 ’22 driven exclusively by a rise in product sales. Further, a slower rise in COGS and operating expenses, saw operating margins rise from 26.9% to 27.4%, a steady quarterly increase for a mature value company such as Cisco. Finally, combined with a drop in the effective tax rate, EPS rose strongly from $0.60 in Q2 ’21 to $0.71 in Q2 ’22.

Now, is CSCO stock set to continue its underperformance or could we expect a rally? We believe that there is a strong 73% chance of a rise in CSCO stock over the next month (21 trading days) based on our machine learning analysis of trends in the stock price over the last ten years. See our analysis on CSCO Stock Chance of Rise. For additional details about Cisco’s historical returns and comparison to peers, see Cisco Systems (CSCO) Stock Return. Additionally, for details about Cisco revenues and comparison to peers, see Cisco Systems (CSCO) Revenue Comparison.

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Twenty-One Day: CSCO -7.9%, vs. S&P500 -2.4%; Underperformed market

(7% likelihood event; 73% probability of rise over next 21 days)

  • Cisco stock dropped -7.9% the last twenty-one trading days (one month), compared to a broader market (S&P500) drop of 2.4%
  • A change of -7.9% or more over twenty-one trading days is a 7% likelihood event, which has occurred 177 times out of 2517 in the last ten years
  • Of these 177 instances, the stock has seen a positive movement over the next twenty-one trading days on 129 occasions
  • This points to a 73% probability for the stock rising over the next twenty-one trading days

Ten Day: CSCO -1.7%, vs. S&P500 -1.2%; Underperformed market

(26% likelihood event; 57% probability of rise over next 10 days)

  • Cisco stock dropped 1.7% over the last ten trading days (two weeks), compared to a broader market (S&P500) drop of 1.2%
  • A change of -1.7% or more over ten trading days is a 26% likelihood event, which has occurred 650 times out of 2517 in the last ten years
  • Of these 650 instances, the stock has seen a positive movement over the next ten trading days on 372 occasions
  • This points to a 57% probability for the stock rising over the next ten trading days

Five Day: CSCO -1.1%, vs. S&P500 -1.8%; Outperformed market

(29% likelihood event; 57% probability of rise over next five days)

  • CSCO stock fell 1.1% over a five-day trading period ending 2/16/2022, compared to the broader market (S&P500) drop of 1.8%
  • A change of -1.1% or more over five trading days (one week) is a 29% likelihood event, which has occurred 720 times out of 2517 in the last ten years
  • Of these 720 instances, the stock has seen a positive movement over the next five trading days on 414 occasions
  • This points to a 57% probability for the stock rising over the next five trading days

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since the end of 2016.

 Returns Feb 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 CSCO Return 0% -12% 85%
 S&P 500 Return -3% -8% 96%
 Trefis MS Portfolio Return 0% -10% 255%

[1] Month-to-date and year-to-date as of 2/17/2022
[2] Cumulative total returns since the end of 2016

 

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