Note: Cisco’s FY 2024 ended July 27, 2024
Cisco Systems Inc (NASDAQ: CSCO), a company providing networking equipment, security, collaboration, and cloud management services, is scheduled to release its fiscal third-quarter earnings on Wednesday, May 14, 2025, with analysts projecting earnings of 92 cents per share on $14.06 billion in revenue. This would represent a 5% year-over-year increase in adjusted earnings and an 11% increase in sales compared to the prior year’s figures of 88 cents per share and $12.7 billion in revenue. Historically, CSCO stock has shown a tendency to outperform following earnings announcements, increasing 60% of the time with a median one-day rise of 4.2% and a maximum observed increase of 7%.
Cisco remains sensitive to global economic shifts due to its large institutional client base. While tariffs on Canada, China, and Mexico may pressure profitability, management has taken steps to mitigate their impact. Despite these uncertainties, Cisco retains its market leadership and is well-positioned to benefit from Internet of Things (IoT) growth. The company has $238 Bil in current market capitalization. Revenue over the last twelve months was $54 Bil, and it was operationally profitable with $12 Bil in operating profits and net income of $9.2 Bil.
For event-driven traders, historical patterns may offer an edge, whether by positioning ahead of earnings or reacting to post-release moves. That said, if you seek upside with lower volatility than from individual stocks, the Trefis High Quality portfolio presents an alternative, having outperformed the S&P 500 and generated returns exceeding 91% since its inception. See earnings reaction history of all stocks.
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Cisco’s Historical Odds Of Positive Post-Earnings Return
Some observations on one-day (1D) post-earnings returns:
- There are 20 earnings data points recorded over the last five years, with 12 positive and 8 negative one-day (1D) returns observed. In summary, positive 1D returns were seen about 60% of the time.
- However, this percentage decreases to 58% if we consider data for the last 3 years instead of 5.
- Median of the 12 positive returns = 4.2%, and median of the 8 negative returns = -4.1%
Additional data for observed 5-Day (5D), and 21-Day (21D) returns post earnings are summarized along with the statistics in the table below.
Correlation Between 1D, 5D, and 21D Historical Returns
A relatively less risky strategy (though not useful if the correlation is low) is to understand the correlation between short-term and medium-term returns post earnings, find a pair that has the highest correlation, and execute the appropriate trade. For example, if 1D and 5D show the highest correlation, a trader can position themselves “long” for the next 5 days if 1D post-earnings return is positive. Here is some correlation data based on 5-year and 3-year (more recent) history. Note that the correlation 1D_5D refers to the correlation between 1D post-earnings returns and subsequent 5D returns.
CSCO Correlation Between 1D, 5D and 21D Historical Returns
Is There Any Correlation With Peer Earnings?
Sometimes, peer performance can have influence on post-earnings stock reaction. In fact, the pricing-in might begin before the earnings are announced. Here is some historical data on the past post-earnings performance of Cisco Systems stock compared with the stock performance of peers that reported earnings just before Cisco Systems. For fair comparison, peer stock returns also represent post-earnings one-day (1D) returns.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
