The internet of things (IoT) is one of the major drivers of the fourth industrial revolution, with significant advances made in the fields of machine learning (ML) and artificial intelligence (AI). IoT has vast implications for industries, devices, data analytics, and processing. As a result, the IoT market is expected to grow at a 25.4% CAGR to $1,854.76 billion by 2028.
The global semiconductor shortage is a significant hindrance to the IoT industry’s growth. However, a $250 billion bipartisan manufacturing and technology bill aimed at boosting chip production should address such barriers.
Cisco Systems, Inc. (CSCO)
CSCO in San Jose, Calif., is a multinational corporation that operates in the field of communications and Information Technology. It sells its services directly to consumers and through distributors. CSCO has an ISS Governance QualityScore of 1, indicating low governance risk.
On August 3, CSCO released an asynchronous video messaging solution Vidcast to create and share short video messages for effective communication in a team. The waitlist for the beta program has been opened to signups. This solution is expected to streamline communication within companies to ensure uninterrupted workflow.
CSCO is creating changes in local economies in Africa by providing EDGE (Experience, Design, Go-to-Market, Earn) Incubation Centers for small- and medium-sized businesses in the region. Given African economies’ tremendous untapped growth potential, the CSCO venture should strengthen CSCO’s dominance in the region.
In its fourth fiscal quarter, ended July 31, the company’s total revenue increased 8% year-over-year to $13.13 billion. Its non-GAAP operating income rose to $4.40 billion, indicating a 9.5% year-over-year increase. Its non-GAAP net income increased 4.7% year-over-year to $3.55 billion, while non-GAAP EPS was $0.84, indicating a 5% increase from the same period last year.
An $0.80 consensus EPS estimate for the current quarter (ending October 2021) reflects a 5.9% year-over-year increase. Likewise, the $12.99 billion consensus revenue estimate for its fiscal fourth quarter indicates an 8.9% increase from the prior-year quarter. CSCO has an impressive earnings surprise history; it has topped consensus EPS estimates in all four trailing quarters.
The stock has gained 40.3% in price in the past year to close yesterday’s trading session at $59.53.
CSCO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
CSCO has a Quality grade of A, and a Stability grade of B. In the B-rated, 54-stock Technology – Communication/Networking industry, it is ranked #5. In addition to the POWR Ratings we’ve stated above, one can see CSCO ratings for Growth, Value, Momentum, and Sentiment here.
Emerson Electric Co. (EMR)
EMR is a manufacturer and technology service provider for the industrial, customer, and commercial markets globally. The company operates through two segments—Automation Solutions; and Commercial and Residential Solutions. EMR is headquartered in St. Louis, Miss.
On June 23, EMR announced a multi-year global agreement with PureCycle Technologies, Inc. (PCT). Under this agreement, PTC will use EMR’s Plantweb™ digital ecosystem platform for large-scale recycling of polypropylene. Regarding the agreement, Mike Train, Chief Sustainability Officer of EMR, said, “New policies and long-range goals for decarbonization give us vision and direction that are important to the industry and society. Emerson’s digital automation software and technologies are helping companies like PureCycle make practical and measurable progress toward these goals today.”
On July 7, EMR announced the launch of Plantweb™ Optics Data Lake, a data management software that helps enterprises with data complexities. The software can be implemented at an enterprise scale turning data into valuable insights. Given the rising demand for advanced analytics applications, EMR’s latest software should expand its customer base.
On September 1, EMR sold its Daniel Measurement and Control business to Turnspire Capital Partners LLC, a private investment firm in New York. This sale should allow EMR to streamline its operations to focus on its primary business model.
The company’s net sales increased 20% year-over-year to $4.7 billion in its third fiscal quarter, ended June 30. Its adjusted EBIT margin rose 310 basis points from the prior-year quarter to 18.4%. Its adjusted EPS came in at $1.09, indicating a 36.3% year-over-year increase.
Analysts expect its EPS to increase 8.2% year-over-year to $1.19 in the current quarter (ending September 2021). The Street’s $5.11 billion revenue estimate for the current quarter indicates a 12.1% year-over-year rise. In addition, EMR beat the consensus EPS estimates in each of the four trailing quarters.
EMR has gained 49.5% in price in the past year and 31.5% year-to-date.
EMR has a Stability, Sentiment, and Quality grade of B. In the 91-stock Industrial – Equipment industry, it is ranked #28.
Click here to see additional POWR Ratings for EMR (Growth, Value, and Momentum).
NXP Semiconductors N.V. (NXPI)
NXPI supplies semiconductor and related products to industrial, mobile, and communications infrastructure, automotive, and IoT industries. NXPI is headquartered in Eindhoven, the Netherlands.
NXPI announced a collaboration with insurance technology company MOTER Technologies, Inc., in July to analyze deep data and provide insurance for automotive vehicles. The partnership should consolidate NXPI’s market reach in the automotive industry.
On June 29, NXPI agreed to a collaboration with Jio Platforms Ltd., the largest network service provider in India for the use of NXPI’s processors for Jio’s 5G platform. Regarding the collaboration, Tareq Bustami, Senior Vice President and General Manager, Network Edge at NXPI, said, “The collaboration with Jio to develop, test and deploy 5G solutions underscores the power of our Layerscape products and the growing ability of NXP’s antenna-to-processor portfolio to accelerate new 5G deployments.”
In its second fiscal quarter, ended July 4, NXPI’s revenue increased 42.9% year-over-year to $2.60 billion. Its EPS came in at $1.42, indicating a substantial increase from its negative year-ago value. The company’s non-GAAP gross margin rose seven percentage points from the same period last year to 56.1%. And its adjusted net income improved 120.7% from the prior-year quarter to $876 million.
The Street’s $2.73 EPS estimate for the current quarter (ending September 2021) reflects a 68.5% increase year-over-year. Likewise, the $2.85 billion consensus revenue estimate for the current quarter indicates a 27.1% increase from the prior-year quarter. NXPI has topped consensus EPS estimates in each of the trailing four quarters.
The stock has gained 60.4% in price over the past year to close yesterday’s trading session at $211.91.
It’s no surprise that NXPI has an overall B rating, which translates to Buy in our POWR Ratings system.
NXPI has a Growth grade of A, and a Momentum and Quality grade of B. It is ranked #18 out of 99 in the B-rated Semiconductor & Wireless Chip industry.
To see additional POWR Ratings for Value, Stability, and Sentiment for NXPI, click here.
PTC Inc. (PTC)
PTC is a multinational software company that operates in two segments—Software Products and Professional Services. Its offerings include ThingWorx, an Industrial IoT platform that enables customers to transform various products and services digitally. The Needham, Mass.-based company’s technology helps industrial firms to optimize their operations and reduce their expenses.
In April, PTC entered a long-term agreement with Technion – Israel Institute of Technology, investing $5 million for research and development projects, and allocating an annual budget for industrial IoT. This effort to bring industry and academic research together is expected to create a synergy that can propel the company forward.
PTC on May 27 announced the launch of Vuforia Instruct™. The Software-as-a-Service (SaaS) offering, found on the PTC Atlas™ platform, is set to use 3D-CAD data to help numerous front-line employees with their inspection duties. This new offering should increase PTC’s revenues substantially in the coming quarters.
PTC’s total revenue increased 23.9% year-over-year to $435.67 million in its fiscal third quarter, ended June 30. Its non-GAAP operating income improved 28.4% from the same period last year to $132.91 million. Its non-GAAP net income increased 36.1% year-over-year to $98.02 million, while non-GAAP EPS improved to $0.83, representing a 33.9% increase year-over-year.
Analysts expect its EPS to increase 37.4% year-over-year to $3.53 in the current year. The $429.62 million consensus revenue estimate for the current quarter (ending September 2021) reflects a 9.9% increase from the prior-year quarter. In addition, the company beat the Street’s EPS estimates in all four trailing quarters.
PTC has gained 35.1% in price in the last year to close yesterday’s trading session at $131.84.
PTC has a Sentiment and Quality grade of B. It is ranked #27 among the 146 stocks in the Software – Application industry.
Click here to see additional POWR Ratings for PTC (Growth, Value, Momentum, and Stability).
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CSCO shares were trading at $59.54 per share on Friday afternoon, up $0.01 (+0.02%). Year-to-date, CSCO has gained 36.03%, versus a 22.03% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...
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