Shares of Cisco Systems (NASDAQ:CSCO) rose 19.8% in November, according to data from S&P Global Market Intelligence. The stock benefited from the broader market’s momentum and climbed after the network technologies company posted better-than-expected first quarter results.
Cisco published first-quarter results on Nov. 12, posting sales and earnings for the period that beat the market’s expectations. The company recorded non-GAAP (adjusted) earnings per share of $0.76 on revenue of $11.93 billion, while the average analyst target had called for per-share earnings of $0.70 on sales of $11.85 billion.
Cisco’s sales fell 9% year over year in the third quarter, largely due to the company’s ongoing pivot to a more software-centric model and enterprises cutting back on spending amid coronavirus-related uncertainty. It was the fourth consecutive quarter in which the tech company posted a year-over-year revenue decline.
Adjusted earnings for the period fell 10% year over year. However, management said that it’s seeing signs of recovery at the business and delivered better-than-expected guidance — paving the way for last month’s double-digit stock gains.
Cisco stock has continued to move higher in December. The company’s share price is up 1.8% in the month so far as of this writing.
Cisco is guiding for second-quarter sales to come in between flat and down 2% compared to the prior-year period. The company expects to post adjusted earnings per share between $0.74 and $0.76, down from per-share earnings of $0.77 in last year’s quarter.
In addition to this year’s tough operating backdrop, Cisco is facing pressure from competitors, including Arista Networks, and a greater number of previously hardware-dependent networking functions being replicated through software applications. Despite these challenges, Cisco still has a great balance sheet to facilitate its push into next-generation networking technologies, and the stock stands out as a potential worthwhile candidate for investors seeking dividend-paying tech stocks.
Cisco stock trades at roughly 14 times this year’s expected earnings and has a 3.2% dividend yield.