ETFs to Gain on Cisco's Q3 Earnings Strength

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Tech prime Cisco Systems CSCO reported robust third-quarter fiscal 2024 results, beating both earnings and revenue estimates. It provided upbeat guidance for the ongoing quarter and the fiscal year.

CSCO shares jumped about 5% in after-market hours. In the pre-market trading, the stock moved up nearly 5% at the time of writing. The smooth trading is expected to continue in the ETF world as well, thereby making ETFs with the largest allocation to this networking giant compelling. The ETFs include iShares U.S. Telecommunications ETF IYZ, Amplify Cybersecurity ETF HACK, First Trust Nasdaq Cybersecurity ETF CIBR, Pacer Data and Digital Revolution ETF TRFK and FT Vest DJIA Dogs 10 Target Income ETF DOGG.

Cisco’s Q3 Earnings in Detail

The company’s earnings of 88 cents per share outpaced the Zacks Consensus Estimate of 70 cents but fell 12% from the year-ago earnings. Revenues fell 13% year over year to $12.7 billion but beat the consensus mark of $12.53 billion. Cisco’s revenues have now fallen for two straight quarters as it deals with an inventory backlog.
    
While the company is seeing increased revenues from software and services, it still gathers more than two-thirds of its revenues from computer networking gear, mainly switches and routers.

The networking giant is currently benefiting from higher AI spending and easing supply chain constraints. The company has a “line of sight” to $1 billion in orders from hyperscalers and others investing in AI, according to its chief financial officer Scott Herren (read: 4 ETFs to Tap the Renewed AI Craze on Wall Street).

It forecasts fiscal 2024 revenue to be in the range of $53.6-$53.8 billion and earnings per share in the range of $3.69-$3.71. The Zacks Consensus Estimate is pegged at $53.06 billion for revenues and $3.68 for earnings per share. For fourth-quarter fiscal 2024, Cisco expects revenues in the range of $13.4-$13.6 billion and earnings in the band of 84-86 cents per share. The Zacks Consensus Estimate is pegged at $13.11 billion for revenues and 86 cents for earnings per share.

ETFs in Detail

iShares U.S. Telecommunications ETF (IYZ)

iShares U.S. Telecommunications ETF offers exposure to U.S. companies that provide telephone and Internet products, services and technologies. It follows the Russell 1000 Telecommunications RIC 22.5/45 Capped Index, holding 19 stocks in its basket. Cisco takes the top position at 16.9% of the assets. iShares U.S. Telecommunications ETF has an AUM of $218.3 million and charges 40 bps in annual fees. It has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (see: all the Communication Services ETFs here).

Amplify Cybersecurity ETF (HACK)

Amplify Cybersecurity ETF is the first cybersecurity ETF that invests in companies within the growing cybersecurity industry. It tracks the Nasdaq ISE Cyber Security Select Index, holding 24 securities in its basket. Cisco takes the second position with 7.6% of assets. Amplify Cybersecurity ETF has amassed $1.7 billion in AUM and charges 60 bps in fees per year (read: Here’s Why You Should Invest in Cybersecurity ETFs).

First Trust Nasdaq Cybersecurity ETF (CIBR)

First Trust Nasdaq Cybersecurity ETF follows the Nasdaq CTA Cybersecurity Index, which measures the performance of companies engaged in the cybersecurity segment of the technology and industrial sectors. The index includes companies primarily involved in the building, implementation and management of security protocols applied to private and public networks, computers and mobile devices to provide protection for the integrity of data and network operations. First Trust Nasdaq Cybersecurity ETF holds 30 stocks in its basket, with Cisco taking the third spot at 6.4%. It has accumulated $6.3 billion in its asset base and charges 59 bps in annual fees.

Pacer Data and Digital Revolution ETF (TRFK)

Pacer Data and Digital Revolution ETF aims to offer investors exposure to globally listed stocks and depositary receipts of data and digital revolution companies. It follows the Pacer Data Transmission and Communication Revolution Index, holding 78 stocks in its basket. Cisco takes the fourth spot, accounting for 6.2% of the assets. Pacer Data and Digital Revolution ETF has accumulated $30 million in its asset base and charges 60 bps in annual fees.

FT Vest DJIA Dogs 10 Target Income ETF (DOGG)

FT Vest DJIA Dogs 10 Target Income ETF is an actively managed fund that seeks to provide exposure to the “Dogs of the Dow” — the 10 highest dividend-yielding stocks in the Dow Jones Industrial Average — on an annual basis. It holds 40 securities in its basket, with Cisco occupying the top position at 5.2% share. FT Vest DJIA Dogs 10 Target Income ETF has an AUM of $32.3 million and an expense ratio of 0.75%.

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Cisco Systems, Inc. (CSCO) : Free Stock Analysis Report

Amplify Cybersecurity ETF (HACK): ETF Research Reports

First Trust NASDAQ Cybersecurity ETF (CIBR): ETF Research Reports

iShares U.S. Telecommunications ETF (IYZ): ETF Research Reports

Pacer Data and Digital Revolution ETF (TRFK): ETF Research Reports

FT Vest DJIA Dogs 10 Target Income ETF (DOGG): ETF Research Reports

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