Cisco Systems (NASDAQ:CSCO) has become the best-performing company in the Dow Jones Index this year after soaring by 58%. It has jumped by 67% in the last 12 months, bringing its valuation to $478 billion. This rally will be put to the test when it publishes its financial results on August 12.
Cisco Stock in Focus Ahead of Earnings
Cisco Systems stock has been in a strong bull run and is the top gainer in the Dow Jones this year. This growth happened because of its important role in the artificial intelligence industry, where it provides numerous networking solutions like switches, routers, and optics. It also sells services in the security, collaboration, and computing sector.
Cisco counts 99% of all companies in the Fortune 100 as clients. Most notably, it is used by the biggest hyperscalers like Microsoft (NASDAQ:MSFT), Meta Platforms (NASDAQ:META), and Alphabet (NASDAQ:GOOG).
The company’s business has grown substantially in the past few years. Its last earnings report showed that its revenue jumped by 12% in the first quarter to $15.8 billion, with its EPS jumping by 37% YoY. Its total product orders jumped by 35%, while its networking product orders jumped by 50%.
This growth will likely accelerate in the coming months as big-tech companies have all hinted that they will continue boosting their data center presence.
As such, analysts expect the upcoming results will show that its revenue jumped by 14.6% in Q2 to $16.8 billion. Its EPS is expected to come in at $1.17, up by 18% from a year earlier. For the year, analysts see the revenue soaring by 11% to $62.9 billion.
Still, while its growth is continuing, there are concerns about its valuation. Its forward price-to-earnings ratio has risen to 28.2, higher than the sector median of 23 and the five-year average of 15. Similarly, the forward PEG ratio of 2.02 is also higher than the sector median of 1.26. Most notably, Benzinga data shows that the average estimate is $109, higher than the current $121.
Cisco Systems Stock Technicals Points to More Gains
The daily chart shows that CSCO recently retreated to $107 in July and then rebounded to $121 today. It has moved above the 50-day Exponential Moving Average (EMA) and is attempted to move above the Supertrend indicator. Such a move will point to more gains in the next few days.
The key level to watch will be the all-time high of $130. A move above this level would signal further gains, as it would invalidate the developing double-top pattern, which has a neckline at $107. However, if the pattern is confirmed, the stock could resume its downward trend.
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