ETFs Set To Gain On Cisco's Robust Results

After the closing bell on Wednesday, May 15, tech prime Cisco Systems (CSCO - Free Report) delivered robust third-quarter fiscal 2019 results. The networking giant beat on both earnings and revenues and also provided an upbeat outlook.

Results in Detail

Earnings of 78 cents per share outpaced the Zacks Consensus Estimate by a penny and improved 18% from the year-ago earnings. Revenues rose 4% year over year to $12.96 billion and edged past the consensus mark of $12.87 billion This upside marks the sixth straight quarter of revenue growth. The company’s strong results were driven by a minimal sales exposure in China and changes to its supply chains that helped shrugging off the impact of the U.S.-China trade dispute.

This networking leader’s transition from its traditional business of high-end switches and routers to high-growth areas, such as security, the IoT and cloud computing is clearly paying off. As a result, Cisco now expects revenue growth of 4.5-6.5% and earnings per share in the range of 80-82 cents in fourth-quarter fiscal 2019. The mid-point of both the ranges is above the Zacks Consensus Estimate of 3.3% for revenue growth and the earnings per share of 80 cents.

Buoyed by solid results and an encouraging guidance, shares of Cisco gained as much as 3% in after-hours trading on heavy volumes. The stock currently has a Zacks Rank #2 (Buy) and a VGM Score of B. However, it belongs to a bottom-ranked industry (bottom 11%).

ETFs to Watch

Given this scenario, the ETF world is also expected to see smooth trading following the impressive Cisco results. Below, we highlight five ETFs flaunting the largest allocation to this network giant:

iShares U.S. Telecommunications ETF (IYZ - Free Report)

This fund follows the Dow Jones U.S. Select Telecommunications Index and offers exposure to 42 American companies that provide telephone and Internet products, services and technologies. Cisco occupies the second position with 23.1% of the assets. The ETF has AUM of $453.2 million and trades in average daily volumes of 587,000 shares. It charges 43 bps in annual fees and has a Zacks ETF Rank 2 with a Medium risk outlook.

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