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Investing in Cisco (CSCO)? Don't Miss Assessing Its International Revenue Trends

Did you analyze how Cisco Systems (CSCO) fared in its international operations for the quarter ending April 2024? Given the widespread global presence of this seller of routers, switches, software and services, scrutinizing the trends in international revenues becomes imperative to assess its financial strength and future growth possibilities.

The global economy today is deeply interlinked, making a company's engagement with international markets a critical factor in determining its financial success and growth path. It has become essential for investors to comprehend how much a company relies on these foreign markets, as this understanding reveals the firm's potential for consistent earnings, its capacity to harness different economic cycles, and its overall growth prospects.

Being present in international markets serves as a counterbalance to domestic economic challenges while offering chances to engage with more rapidly evolving economies. However, this kind of diversification introduces challenges like currency fluctuations, geopolitical uncertainties and varying market trends.

Upon examining CSCO's recent quarterly performance, we noticed several interesting patterns in the revenue generated from its international segments, which are commonly analyzed and observed by Wall Street experts.

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The company's total revenue for the quarter stood at $12.7 billion, declining 12.8% year over year. Now, let's delve into CSCO's international revenue breakdown to gain insights into the significance of its operations beyond home turf.

Unveiling Trends in CSCO's International Revenues

During the quarter, APJC contributed $1.87 billion in revenue, making up 14.8% of the total revenue. When compared to the consensus estimate of $1.73 billion, this meant a surprise of +8.51%. Looking back, APJC contributed $1.8 billion, or 14.1%, in the previous quarter, and $2.13 billion, or 14.6%, in the same quarter of the previous year.

Of the total revenue, $3.46 billion came from EMEA during the last fiscal quarter, accounting for 27.2%. This represented a surprise of +8.99% as analysts had expected the region to contribute $3.17 billion to the total revenue. In comparison, the region contributed $3.48 billion, or 27.2%, and $3.81 billion, or 26.1%, to total revenue in the previous and year-ago quarters, respectively.

International Market Revenue Projections

Wall Street analysts expect Cisco to report $13.52 billion in total revenue for the current fiscal quarter, indicating a decline of 11.1% from the year-ago quarter. APJC and EMEA are expected to contribute 12.7% ($1.72 billion) and 23.6% ($3.19 billion) to the total revenue, respectively.

Analysts expect the company to report a total annual revenue of $53.42 billion for the full year, marking a decrease of 6.3% compared to last year. The expected revenue contributions from APJC and EMEA are projected to be 13.5% ($7.23 billion) and 25.3% ($13.51 billion) of the total revenue, in that order.

Key Takeaways

Cisco's reliance on international markets for revenues offers both opportunities and risks. Hence, keeping an eye on its international revenue trends could significantly help forecast the company's prospects.

In a world where international interdependencies and geopolitical conflicts are ever-increasing, Wall Street analysts closely monitor these trends for companies having international presence to adjust their earnings forecasts. Of course, there are several other factors, including a company's standing within its home borders, that influence analysts' earnings forecasts.

Emphasizing a company's shifting earnings prospects is a key aspect of our approach at Zacks, especially since research has proven its substantial influence on a stock's price in the short run. This correlation is positively aligned, meaning that improved earnings projections tend to boost the stock's price.

The Zacks Rank, our proprietary stock rating tool, comes with an externally validated impressive track record. It effectively utilizes shifts in earnings projections to act as a dependable barometer for forecasting short-term stock price trends.

Cisco, bearing a Zacks Rank #4 (Sell), is expected to underperform the broader market's movements in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

A Look at Cisco's Recent Stock Price Performance

Over the preceding four weeks, the stock's value has diminished by 0.3%, against an upturn of 5.8% in the Zacks S&P 500 composite. In parallel, the Zacks Computer and Technology sector, which counts Cisco among its entities, has appreciated by 7.4%. Over the past three months, the company's shares have seen a decline of 1.4% versus the S&P 500's 6.3% increase. The sector overall has witnessed an increase of 7.7% over the same period.

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