Monday, February 24, 2014

Cisco isn't Performing, but it can Still go Higher

Cisco (NASDAQ: CSCO  ) is under-performing. Its stock price is nearly 20% worse off than the S&P 500 on a yearly comparison. The company's recent acquisition history has been underwhelming, and its corporate execution has been disappointing. The company appears to be moving into a zone whereby all it has to do is internally execute, and the stock price will likely go higher. For this reason alone, Cisco is worth a Foolish look.

What you already know about CiscoCisco's second-quarter results came in with an 8% sales decline, when the company had previously forecast a fall of 8%-10%. In addition, its sales decline is hurting gross margins because they came toward the bottom end of its 61%-62% guidance range. Given that it's guidance for the upcoming third quarter was for a 6%-8% sales decline, it's reasonable to assume that gross margins will be relatively weak in the next quarter as well.

While this was obviously new news to the market, Cisco's results actually told investors more about what they already knew about the company.