Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



How Cisco Systems, Inc. Gained 11% in February

What happened

Shares of Cisco Systems (NASDAQ: CSCO  ) rose 11.3% in February 2017, according to data from S&P Global Market Intelligence.

So what

The big surge fell near the middle of the month, when Cisco reported solid second-quarter results with a side of optimistic forward guidance targets. If that weren't enough, the networking equipment veteran also boosted its quarterly dividend payout by 12% and retired $1 billion of its shares. Cisco investors can now look back at a market-beating 25% return over the last 52 weeks.

Ethernet cables plugged into a busy network router.

Image source: Getty Images.

Now what

Cisco is reshaping its revenue intakes these days, raising the percentage of recurring contract sales from 26% to 31% over the last six quarters. Because of this transition, Cisco's deferred revenue balance increased by 51% year over year in the second quarter. The end result is a more stable and predictable business model. Expect this trend to continue, as "everything is growing in that space," according to CFO Kelly Kramer.

Management is constructing a whole new business framework, here, and I quite like the new structure. To stay on top of Cisco's fundamental makeover, keep an eye on deferred revenue and gross margins from here on out. So far, the move toward more contract-based sales is working out brilliantly:

CSCO Non-Current Deferred Revenue (Quarterly) Chart

CSCO Non-Current Deferred Revenue (Quarterly) data by YCharts.

10 stocks we like better than Cisco Systems
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now...and Cisco Systems wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of February 6, 2017.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 4007842, ~/Articles/ArticleHandler.aspx, 3/23/2017 12:17:55 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
Change up DOW 20733.0 71.7 0.4%
Change up S&P 500 2356.8 8.4 0.4%
Change up NASD 5838.6 17.0 0.3%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

3/23/2017 12:02 PM
CSCO $34.20 Up +0.10 +0.29%
Cisco Systems CAPS Rating: ****

Article registration testing

Revisit this page

Clear article's cache and revisit this page

Or, visit the current page, forcing Test ID to article:interrupt:106919 and

Tookie Value = 17263374729728790767991563121802