Earnings season occurs once every quarter and is when the majority of publicly traded companies report their profits or losses during the previous few months. This is an important time for traders, investors, and analysts because they use this information to gauge whether a company’s stock price is fairly valued, overvalued, or undervalued. Therefore, a stock’s volatility often ensues after earnings are released.
This has been a particularly interesting earnings season because of…
the coronavirus pandemic. Traders, investors, and analysts have been understandably concerned over the impact of Covid-19 on corporate financials. Most of the companies reporting have been adding their commentary and response plans about the crisis to their earnings release and adjusting their guidance.
Though we are at the tail-end of earnings season, a number of large companies will be reporting this week. Cisco Systems, Inc. (CSCO), Applied Materials, Inc. (AMAT), NetEase Inc. (NTES) and Baidu, Inc. (BIDU) are the four “Buy” rated stocks in our proprietary POWR Ratings System that are scheduled to report their quarterly results over the next four days.
Cisco Systems, Inc. (CSCO)
CSCO is scheduled to report its results for the fiscal fourth quarter ended July 2020 after the close of the market on August 12th. The market expects the company to report EPS of $0.74 for the quarter which indicates a 12.2% decline from the year-ago number. Moreover, CSCO’s consensus revenue estimate of $12.08 billion for the quarter indicates a year-over-year decline of 10%. However, CSCO’s earnings surprise history looks impressive, with the company beating the consensus EPS estimates in each of the trailing four quarters.
For the fiscal third quarter, revenue decreased by 8% year-over-year and EPS increased 1% year over year. The stock has grown 46.4% since its March lows.
CSCO’s recent acquisition of ThousandEyes, an internet and cloud intelligence platform will help improve network and application performance across enterprise and cloud networks as well as provide customers with an end-to-end view into digital delivery over the internet.
OTEGLOBE, which is a leading wholesale carrier in South East Europe, enhanced its network backbone with Cisco ASR 9900 5th Generation Line Cards in order to meet increased Internet demand and prepare for expected growth in 5G.
Furthermore, CSCO and Acacia are engaged in the ongoing review conducted by the State Administration for Market Regulation of the People’s Republic of China and expect the acquisition to get regulatory clearance. The closing of this potential acquisition will provide growth opportunities for CSCO.
How does CSCO stack up for the POWR Ratings?
A for Trade Grade
B for Buy & Hold Grade
B for Industry Rank
B for Overall POWR Rating
The stock is also ranked #16 out of 51 stocks in the Technology-Communication/Networking industry.
Applied Materials, Inc. (AMAT)
This materials engineering solutions company will hold its earnings webcast on August 13th to discuss the financial results of its fiscal third quarter. The market expects AMAT to report EPS of $0.95 for the quarter which indicates a 28.4% increase over the year-ago number. Moreover, AMAT’s consensus revenue estimate of $4.13 billion for the quarter indicates a year-over-year increase of 16%. AMAT’s earnings surprise history looks impressive, with the company beating the consensus EPS estimates in three of the trailing four quarters.
For the fiscal second quarter, revenue was up 12% and EPS was up 27% year-over-year. The stock has returned more than 70% since it hit its 52-week low of $36.64 on March 18th this year.
AMAT recently announced a new addition to its Centris® Sym3® etch product family which helps chipmakers pattern features for advanced memory and logic chips. The Sym3 etch system is one of AMAT’s most successful products and the company reached a milestone of shipping its 5,000th Sym3 chambers recently. Furthermore, AMAT’s new Selective Tungsten process technology removes the contact resistance bottleneck which hinders performance scaling and transistor power in foundry-logic nodes.
It’s no surprise that AMAT is rated “Buy” in our POWR Ratings system. It also has an…
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