Cisco is 'more reasonably priced' after Q1 earnings

Cisco Systems Inc (NASDAQ: CSCO) is down 10% in extended hours even though it reported market-beating results for its fiscal first quarter.

Why is Cisco stock down in after-hours?

The stock is being punished primarily because the networking hardware company issued disappointing guidance for the full year.

Cisco is now calling or $3.87 to $3.93 of adjusted per-share earnings this year on up to $55 billion in revenue. Analysts, in comparison, were at $4.05 a share and $57.76 billion, respectively. Still, Barbara Doran – the Chief Investment Officer of BD8 Capital Partners said today:

The earnings release arrives a couple months after Cisco Systems announced plans of buying Splunk for $28 billion (find out more). Its shares are now trading below the price at which they started 2023.

Cisco reports a slowdown in new orders

Cisco noted a slowdown in new product orders in Q1 as its clients continued to install products that were delivered to them over the past three quarters.

A couple quarters of shipped products, as per the Nasdaq-listed firm, are pending implementation. On CNBC’s “Closing Bell: Overtime”, Doran added:

Other notable figures in the earnings report include a 9.0% annualised growth in product revenue and a 4.0% increase in services revenue.

Notable figures in Cisco Q1 earnings release

• Earned $3.64 billion versus the year-ago $2.67 billion
• Per-share earnings also increased from 65 cents to 89 cents
• Adjusted EPS printed at $1.11 as per the press release
• Revenue jumped 7.6% year-over-year to $14.67 billion
• Consensus was $1.03 a share on $14.61 billion revenue
• Gross margin improved 400 basis points in fiscal Q1

On Wednesday, the tech company also declared 39 cents a share of quarterly dividend. According to Charlie Bobrinskoy of Ariel Investments, Cisco stock is “more reasonably priced” compared to peers.