The ongoing Russia-Ukraine war has led to global supply disruptions increasing the prices of crude oil and commodities. In addition, with inflation at its highest level in four decades, the chances of aggressive interest rate hikes by the Federal Reserve are rising. Also, the U.S. economy shrank 1.4% last quarter for the first time since the pandemic-led disruptions struck two years ago.
The Dow Jones Industrial Average (DJIA) sank 4.9% last month as it had its worst month since March 2020. However, corporate earnings and the U.S. job market appear to be in a solid position. Furthermore, consumers and businesses kept spending in a sign of underlying resilience. With a string of positive economic reports, DJIA is expected to recover in the upcoming months.
Given this backdrop, we think it could be wise to scoop up the shares of Dow Jones components Cisco Systems, Inc. (CSCO), The Coca-Cola Company (KO), and Walmart Inc. (WMT).
Cisco Systems, Inc. (CSCO)
CSCO designs, manufactures, and sells Internet Protocol-based networking and other communications and information technology products. In addition, it provides infrastructure platforms, including networking technologies of switching, routing, wireless, and data center products.
On March 1, 2022, CSCO and Rakuten signed a strategic agreement to accelerate the open RAN and Telco cloud market. Jonathan Davidson, Executive Vice President and General Manager, Mass-Scale Infrastructure Group, Cisco, said, "Together with Rakuten Symphony, we have the unique opportunity to offer global service providers an alternative to legacy RAN, with a turnkey option to transform their networks to be more intuitive and automated to support the ever-evolving needs for connectivity."
CSCO’s net revenue increased 6% year-over-year to $12.70 billion for the fiscal second quarter ended January 29, 2022. The company’s non-GAAP operating income grew 6% year-over-year to $4.40 billion, while its non-GAAP net income came in at $3.50 billion, representing a 6% year-over-year increase. Also, its non-GAAP EPS came in at $0.84, up 6% year-over-year.
CSCO’s EPS is expected to increase 9.5% year-over-year to $0.92 for the fiscal quarter ending July 31, 2022. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters. Also, the company’s revenue is expected to increase 6.1% year-over-year to $52.85 billion in fiscal 2022.
CSCO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an A grade for Quality and a B grade for Stability. Click here to access the additional POWR Ratings for CSCO (Sentiment, Growth, Value, and Momentum). CSCO is ranked #5 out of 55 stocks in the Technology - Communication/Networking industry.
The Coca-Cola Company (KO)
KO is a beverage company that manufactures, markets, and sells various nonalcoholic beverages worldwide. The company provides sparkling soft drinks, flavored and enhanced water, and sports drinks. It also offers beverage concentrates, syrups, and fountain syrups to restaurants and convenience stores.
On April 27, 2022, KO declared a 44 cents per common share dividend. The dividend is payable July 1, 2022, to shareowners of record of the company as of the close of business on June 15, 2022. Earlier this year, the board of directors approved the company’s 60th consecutive annual dividend increase, raising the quarterly dividend approximately 5 percent from 42 cents to 44 cents.
KO’s net revenue increased 16% year-over-year to $10.49 billion in the first quarter, which ended April 1, 2022. The company’s operating income grew 26% year-over-year to $3.41 billion, while its non-GAAP net income came in at $2.80 billion, representing an 17% year-over-year increase. Also, its non-GAAP EPS came in at $0.64, up 16% year-over-year.
Analysts expect KO’s EPS to increase 6.9% year-over-year to $2.64 in fiscal 2023. In addition, it surpassed Street EPS estimates in each of the trailing four quarters. Also, the company’s revenue is expected to increase 13.9% year-over-year to $10.61 billion for the current quarter ending June 30, 2022. The stock has gained 19.1% over the past year to close Friday’s trading session at $63.94.
It’s no surprise that KO has an overall B rating, which equates to Buy in our POWR Ratings system. The stock has a B grade for Quality, Stability, and Sentiment.
Click here to see KO’s rating for Growth, Value, and Momentum as well. KO is ranked #15 out of 36 stocks in the B-rated Beverages industry.
Walmart Inc. (WMT)
Starting as a single discount store in 1945, WMT has become one of the largest retailers in the world now. The company operates through three segments — Walmart U.S.; Walmart International; and Sam's Club. It operates roughly 10,500 stores and clubs under 48 banners across 24 countries and has a strong e-Commerce presence as well.
On March 15, 2022, WMT announced plans to make Toronto, Ontario and Atlanta, Georgia, two new Walmart Global Tech hubs because of their growing tech presence, connection to Walmart, and broad and diverse local talent. The expansion is part of Walmart Global Tech's plan to hire more than 5,000 associates globally this fiscal year.
WMT’s total revenue increased 4.3% year-over-year to $152.90 billion for the fiscal fourth quarter ended January 31, 2022. The company’s net income came in at $3.63 billion compared to a loss of $2 billion in the prior-year quarter. Also, its EPS came in at $1.28 compared to a loss of $0.74 in the year-ago period.
Analysts expect WMT’s EPS and revenue to increase 7.6% and 3.5% year-over-year, respectively, in fiscal 2024. It surpassed Street EPS estimates in each of the trailing four quarters. Over the past three months, the stock has gained 11.3% to close Friday’s trading session at $153.68.
WMT’s POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to Strong Buy in our proprietary ratings system.
The stock has a B grade for Growth, Stability, and Quality. Within the A-rated Grocery/Big Box Retailers industry, WMT is ranked #10 out of 39 stocks.
To see the additional POWR Ratings for WMT (Value, Sentiment, and Momentum), click here.
CSCO shares were trading at $49.03 per share on Monday afternoon, up $0.05 (+0.10%). Year-to-date, CSCO has declined -21.64%, versus a -14.19% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.
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