The Zacks Analyst Blog Highlights: Cisco Systems, Autodesk, TiVo, Scientific Games and Triumph Group

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Feb 12, 2013, 09:30 ET

CHICAGO, Feb. 12, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Cisco Systems, Inc. (Nasdaq:CSCO), Autodesk Inc. (Nasdaq:ADSK), TiVo Inc. (Nasdaq:TIVO), Scientific Games Corporation (Nasdaq:SGMS) and Triumph Group Inc. (NYSE:TGI).

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Here are highlights from Monday's Analyst Blog:

What's In Store for Cisco in 2Q?

Cisco Systems, Inc. (Nasdaq:CSCO) is set to report second quarter 2013 results on Feb 13. Last quarter it posted a 7.32% positive surprise. Let's see how things are shaping up for this announcement.

Growth Factors This Past Quarter

Though Cisco was affected by the sluggish macro environment, the company's sales growth rates in the third quarter were above the year-ago comparable period and better than management guidance due to the ramp up of several important products, and strength in the Data Center and Wireless business.

The company's focus on new products resulted in continued market share gains and margin expansion in the last quarter. Order growth was quite encouraging and the trend is reflective of Cisco's superior strategy and innovation.

The company's restructuring activities to expand its operations in certain strategic areas including cloud computing and pursuance of growth opportunities in international markets could be potential catalysts going forward. However, we believe the intense competition in the company's core businesses of routers and switches remain a matter of concern.

Earnings Whispers?

The Zacks Consensus Estimate for the second quarter stands at 43 cents while that for fiscal 2013 stands at $1.76.

Cisco has beaten estimates in all of the last four quarters, with a trailing four-quarter average positive surprise of 6.98%.

Estimate revisions have been minimal, with only one downward estimate revision in the past 60 days. As a result, the Zacks Consensus Estimate has remained unchanged for the second quarter as well as for fiscal 2013 over the last 60 days. Over the last 90 days, however, the Zacks Consensus Estimate has gone up by around 2.4% and 2.3% for the second quarter and 2013, respectively.

However, the stock carries a Zacks Rank #4 (Sell). We caution against stocks with Zacks Rank #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Our model states that astock needs to have both a positive earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1, #2 or #3 to beat earnings estimates. You could, therefore, consider other stocks instead like:

Autodesk Inc. (Nasdaq:ADSK), a Zacks Rank #2 (Buy) with an ESP of +15.79%.

TiVo Inc. (Nasdaq:TIVO), a Zacks Rank #2 (Buy) with an ESP of +8.33%.

Scientific Games Corporation (Nasdaq:SGMS), a Zacks Rank #3 (Hold) with an ESP of +33.33%.

Triumph Reiterated at Outperform

We have retained our Outperform recommendation on the aerospace giant,Triumph Group Inc. (NYSE:TGI), due to its strong third quarter 2013 results. The stock currently holds a Zacks Rank #2 (Buy).

Why the Reiteration?

Triumph reported a solid third quarter 2013 results with EPS of $1.46, surpassing the Zacks Consensus Estimate of $1.38, by a comfortable margin of 5.8%. The earnings also increased year over year by 13.2%. This increment was a result of a sound organic growth of the company coupled with good cost control measures taken in the quarter.

The company also reported a strong backlog of $4.1 billion exiting the third quarter 2013. This is expected to boost up the revenue generation in the upcoming quarters.

In the last thirty days, most of the estimates for fiscal 2013 have been revised upwards with none moving down. A similar trend was observed for fiscal 2014.

Triumph also acquired Embee Incorporated in December 2012, which is expected to contribute roughly $50.0 million in annual revenue. Also, subsequent to the quarter, Triumph also announced its plans to acquire Goodrich Pump & Engine Control Systems (GPECS), scheduled for completion in the current quarter. The acquisition is expected to contribute roughly $195.0 million to the annual revenue.

Moreover, the aviation market in general is expected to expand due to an increase in demand of general aviation aftermarket parts and services. Also, with an increase in energy costs, the demand for fuel-efficient jets is bound to increase. The company is likely to benefit from its fuel control and technologically advanced jets.

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