The remote lifestyle, particularly workforce structures, and dependence on cloud computing have heightened the demand for networking solutions over the past year. Because the pandemic-driven trends are expected to continue even in the post-pandemic world, the demand for networking is not expected to decline anytime soon. Though the economic recovery and concerns about inflation have been driving a rotation by investors away from tech stocks, we think the solid growth prospects of networking companies should help their stocks rebound in the near term.
The growing need for cybersecurity, cloud-computing, automation and analytic solutions, as many businesses continue to adopt hybrid-working models, should be to the benefit of networking service providers. In fact, the global Network-as-a-Service market is expected to grow at a 33.1% CAGR over the next five years to reach $45.03 billion by 2026.
Given this backdrop, we think it is wise to bet on top networking stocks Cisco Systems, Inc. (CSCO – Get Rating), Motorola Solutions, Inc. (MSI – Get Rating), and Zebra Technologies Corporation (ZBRA – Get Rating).
CSCO designs, manufactures, and sells Internet Protocol (IP) based networking products and services related to the communications and information technology industry worldwide. Its offerings include infrastructure platforms, applications, security and other products.
On May 14, CSCO announced its intent to acquire Kenna Security, Inc., a privately held cybersecurity company in California, to advance CSCO’s commitment to detect cyber threats faster and simplify security Kenna’s risk-based vulnerability management technology. Because individuals and organizations are adopting hybrid working models, the company anticipates healthy sales amid the rising need for cybersecurity.
On May 5, CSCO’s Webex, a leading provider of cloud-based collaboration solutions, announced a new integration with Box, Inc. (BOX), a leading cloud content management platform, which will enable users to access Webex as a Recommended App within Box. This should help businesses work securely in the cloud, and CSCO expects to expand its customer base with the facility in the coming months.
CSCO’s total revenue for its fiscal year 2021 third quarter, ended May 1, increased 6.8% year-over-year to $12.80 billion. Its non-GAAP gross profit was $8.45 billion, up 5.7% from the prior-year period. Its non-GAAP income from operations is reported to be $4.30 billion for the quarter, which represents a 2.8% improvement year-over-year. While its non-GAAP net income increased 4.2% year-over-year to $3.51 billion, its EPS increased 5.1% year-over-year to $0.83.
The $0.82 consensus EPS estimate for the current quarter, ending July 31, represents a 2.5% year-over-year improvement. The stock surpassed consensus EPS estimates in each of the trailing four quarters. The $13.02 billion consensus revenue estimate for the current quarter represents a 7.1% rise from the prior-year period. Analysts expect CSCO’s EPS to grow 5.9% per annum over the next five years. CSCO has climbed 26.6% over the past nine months to close yesterday’s trading session at $53.31.
CSCO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has an A grade for Quality, and a B grade for Stability. We have also graded CSCO for Growth, Value, Sentiment and Momentum. Click here to access all CSCO’s ratings.
CSCO is ranked #10 of 54 stocks in the B-rated Technology – Communication/Networking industry.
MSI is a data communications and telecommunications equipment provider that develops data capture, wireless, infrastructure, bar code scanning, two-way radios, and wireless broadband networks. It also produces public safety and government products, voice and data communications products and systems, and wireless LAN securities.
On May 18, MSI signed a framework agreement with BlueLight Commercial to provide U.K. police forces, highway patrols and border guards with integrated video solutions for their vehicles to improve road safety and the performance of operating units. With the ability to capture…
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