Shares of networking titan Cisco Systems (CSCO) are down in after-hours trading after reporting solid second-quarter results. The company beat analyst expectations of $1.02 with adjusted earnings per share of $1.04. In addition, revenue came in at $15.3 billion, which surpassed the expected $15.11 billion.
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These results were due to strong growth in product orders across all regions and customer types. Overall product orders rose 18% year-over-year, with networking product orders seeing growth of more than 20%. In addition, Cisco’s Remaining Performance Obligations (RPO), which represent future revenue, rose to $43.4 billion, up 5% overall. As we can see from the image below, RPO has been steadily increasing over the past several years.
Moreover, Cisco returned $3 billion to shareholders. Dividends made up $1.6 billion, or $0.41 per share, while buybacks made up the remaining $1.4 billion. The firm regularly repurchases its shares each quarter and has $10.8 billion remaining under its buyback plan.
Cisco’s Guidance
Looking forward, management has provided the following guidance:
- Q3 revenue between $15.4 billion and $15.6 billion, versus estimates of $15.21 billion
- Q3 adjusted earnings of $1.02 to $1.04 per share, compared to expectations of $1.03
- FY26 revenue between $61.2 billion and $61.7 billion, versus estimates of $60.77 billion
- FY26 adjusted earnings of $4.13 to $4.17 per share, compared to expectations of $4.13
As you can see, guidance was better than expected. However, it seems that investors were hoping for a more convincing beat, which likely contributed to the stock’s after-hours move at the time of writing.
Is CSCO a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on CSCO stock based on 10 Buys, three Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average CSCO price target of $91.30 per share implies 6.4% upside potential. However, it’s worth noting that estimates will likely change following today’s earnings report.
