As the second-quarter earnings season winds down, the technology sector results have been notably better than expected.
Based on the quarterly results of 93.9% of the sector’s total market cap in the index that have been declared as of Aug 18, the industry has outperformed rather remarkably.
Total earnings for these companies have dipped 0.3% in spite of 2.9% higher revenues. Despite the bleak year-over-year comparisons, a whopping 82% beat earnings estimates, while 74.1% exceeded top-line expectations.
In the computer networking space, Cisco Systems, Inc. CSCO beat our estimates for both earnings and revenues in its fourth quarter. Earnings of 58 cents exceeded the Zacks Consensus Estimate by 3 cents and revenues of $12.6 beat the consensus mark of $12.5 billion.
Despite intensifying competition from several smaller players, Cisco remains strong in its domain. Cisco’s strategy of diversifying its business by introducing software-based networking tools and security services, and relying less on specialized routers and switching equipment appears to be yielding results.
Cisco is acquiring a cloud-based security company, CloudLock, which is expected to enhance its current cloud security offerings. The purchase will help the network equipment maker to expand its efforts and meet changing compliance and security needs.
Besides Cisco, some other stocks in the same space are also looking impressive right now.
Keep an Eye on These 4 Performers
Netgear Inc. NTGR designs technologically advanced, branded networking products that address the specific needs of small businesses and individual users. The company’s suite of products enables users to share Internet access, peripherals, files, digital multimedia content and applications among multiple personal computers and other Internet-enabled devices.
The Zacks Consensus Estimate for 2016 improved to $2.65 from $2.41 over the last 60 days. The EPS growth estimate is 38.0% for the current year, as against the industry average of negative 15.2%. This Zacks Rank #1 (Strong Buy) stock has gained 13.1% in the last one month.
Radcom Ltd. RDCM designs, manufactures, markets and supports innovative, high performance internetworking test and analysis equipment for data communications networks. Its products are used in the development and manufacturing of network equipment, installation of networks, and the ongoing maintenance of operational networks.
The Zacks Consensus Estimate for 2016 improved to 32 cents from 22 cents over the last 60 days. The long-term EPS growth estimate is 15.0% for the current year, as against the industry average of negative 7.7%. The company has gained 25.0% in the last one month. It carries a Zacks Rank #1.
Extreme Networks Inc. EXTR is a leading provider of a next generation of switching solutions that meet the increasing needs of enterprise local area networks, Internet service providers and content providers.
The Zacks Consensus Estimate for the current year improved to 19 cents from 15 cents over the last 60 days. The EPS growth estimate is 35.7% for the current year, as against the industry average of negative 15.2%. This Zacks Rank #2 (Buy) stock has gained 8.2% in the last one month.
Silver Spring Networks, Inc. SSNI operates as a networking platform and solutions provider for smart energy networks. It enables utilities to transform the power grid infrastructure into the smart grid.
The Zacks Consensus Estimate for the current year improved to a loss of 45 cents per share from a loss of 47 cents over the last 60 days. The EPS growth estimate is 19.6% for the current year, as against the industry average of negative 15.2%. This Zacks Rank #2 stock has gained 6.5% in the last one month.
These stocks have managed to grab the spotlight with notable performances, supported by decent earnings and impressive growth projections. With this in mind, we believe investing in these stocks will yield strong returns for your portfolio in the short term.
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CISCO SYSTEMS (CSCO): Free Stock Analysis Report
NETGEAR INC (NTGR): Free Stock Analysis Report
EXTREME NETWRKS (EXTR): Free Stock Analysis Report
SILVER SPRING (SSNI): Free Stock Analysis Report
RADCOM LTD (RDCM): Free Stock Analysis Report
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