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Research On Cisco’s Earnings Guidance Indicates It Is A Better Buy

Read more articles on Finance and Internet and Investing.

February 25, 2007

Posted by neillevine

About This Editor: I am a writer. Have been writing for other sites, but expect to do most of my future work HERE! My expertise extends from the esoteric such as burning hydrogen to the unpredictability of the stock market and my writing makes me a jack of all trades and exasperated master of none. I have had some influence over national wildfire and water policy and there are hints of a change in energy policy, BUT as Samuel Goldwyn once said, "A verbal promise is not worth the paper it is written on."

         

The internet has made it easy to do research about most listed stocks. Google, Yahoo, MSN, The New York Times, amongst other sites offer market quotes and other information so it is now comparatively easy, especially compared to pre-internet days, to look up information on a company and decide if it will offer a good return on whatever capital you invest.

Take Cisco, CSCO. The company is a leading IP networking equipment manufacturer. In case you don’t know, this is the machinery that allows you to connect to a company site, such as Google, Yahoo, or The Times, on the world wide web. Cisco acquired Scientific-Atlanta, a maker of tv set top connection boxes in early 2006 so it in a good position to provide equipment for the coming surge in online video feed sales.

All four sites mentioned above offer easy to find analyst’s earnings guidance for Cisco and all four offer numbers that are in the same general ball park for what counts in deciding if the company is worth investing in. MSN says the PE is 26.50. Google says the PE is 30.91 with forward PE 21.57. Yahoo says trailing twelve month PE was 26.55 and The Times lists Pe of 26.71. This is based on current yearly earnings of $1.04 (MSN), $1.00 for what they call last year on Google, $1.04 on Yahoo and The Times offering a somewhat lower $0.89. But all are giving earnings guidance of from $1.22 to $1.33 for the coming fiscal year and a range of $1.44 to $1.56 for fiscal 2008, reasonably closely clustered and pretty good earnings growth if the implicit targets of about twenty-five percent per year earnings growth are met.

Under such a rosy scenario, the stock is likely to follow the money it earns and grow fifty percent in the next two years. Not bad. Assuming the worst thing that happens to the economy is one or two more quarter point up ticks in interest rates coming from the Fed.