Dividends4Life: 4 Reasons to Buy Cisco After Its Solid Second Quarter

Dividend Growth Stocks News

Shares of Cisco (NASDAQ:CSCO) recently rallied to a multi-year high after the company reported its second quarter earnings. Its revenue rose 7% annually to $12.4 billion (excluding the divestment of its service provider video business), beating estimates by $30 million. Its non-GAAP earnings climbed 16% to $0.73 per share, topping expectations by a penny.

1. Impressive revenue and earnings growth
Cisco was once considered a slow-growth tech stock. That changed over the past year as sales of its infrastructure platforms (routers, switches, and other hardware) rebounded on strong demand. 2. Stable gross and operating margins
Cisco's total non-GAAP gross margin fell 100 basis points annually to 64.1% during the quarter as its Product and Service gross margins both contracted. Its non-GAAP operating margin stayed flat at 32.1%. 3. Plenty of cash for shareholder-friendly moves. During the quarter Cisco spent $5 billion repurchasing 111 million shares at an average price of $45.09 per share. 4. It's still surprisingly cheap. Last but not least, Cisco's stock remains surprisingly cheap at 14 times forward earnings.

Source: Motley Fool

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