Aug 01, 2017

Cisco Systems (NASD: CSCO) Zacks Rank 3-Hold

$31.45 USD ( As of 07/31/17 ) Style:Value: Growth: Momentum: VGM:

Data Overview Summary

52 Week High-Low $34.60 - $29.12 Cisco Systems is the leading provider of IP-based networking and other products.
20 Day Average Volume 16,506,902
Nevertheless, intensifying competition from several smaller players, slowing order
growth from service providers and challenges in the emerging markets are the primary
Beta 1.24
headwinds. We note, the company has underperformed the S&P 500 index on a year-
Market Cap 157.25 B to-date basis. Revenues are expected to decline due to lower order growth in the
Dividend / Div Yld $1.16 / 3.69% reported quarter, which affected backlog. Nonetheless, we believe Cisco’s expanding
Industry Computer - Networking
footprint in the rapidly growing security and data center market are promising.
Estimates have been stable ahead of the company's Q4 earnings release. The
Industry Rank 176 / 265 (Bottom 34%)
company has positive record of earnings surprises in the recent quarters. Moreover,
Current Ratio 3.52 partnerships with the likes of Pure Storage, salesforce.com and IBM will help Cisco to
Debt/Capital 30.15% gain signficant traction in the data center, cloud and Internet of Things (IoT) market in
the long haul.
Net Margin 20.61%

Price/Book (P/B) 2.41

Price/Cash Flow (P/CF) 12.15 Elements of the Zacks Rank

Earnings Yield 6.82%
Agreement Estimate Revisions (60 days)
Debt/Equity 0.43

Value Score 0% 0% 0% 0%
P/E (F1) 14.61

P/E (F1) Rel to Industry -23.92 Q1 (Current Qtr) Q2 (Next Qtr) F1 (Current Year) F2 (Next Year)
PEG Ratio 1.95 Revisions: 0 Revisions: 0 Revisions: 0 Revisions: 0
Up: 0 Down: 0 Up: 0 Down: 0 Up: 0 Down: 0 Up: 0 Down: 0
P/S (F1) 3.28

P/S (TTM) 3.24

Magnitude Consensus Estimate Trend (60 days)
P/CFO 12.15

P/CFO Rel to Industry -133.51

EV/EDITDA Annual 7.46

Growth Score
Proj. EPS Growth (F1/F0) 2.79% 60 30 7 Current 60 30 7 Current 60 30 7 Current 60 30 7 Current
Days Days Days Days Days Days Days Days Days Days Days Days
Hist. EPS Growth (Q0/Q-1) 1.85 Q1 0% Q2 0% F1 0% F2 0%
Qtr CFO Growth -10.07

2 Yr CFO Growth 11.43

Upside Zacks Consensus Estimate vs. Most Accurate Estimate
Return on Equity (ROE) 16.93%

(NI - CFO) / Total Assets -2.34

Asset Turnover 0.39

Momentum Score Most Accurate: 0.55 Most Accurate: 0.55 Most Accurate: 2.15 Most Accurate: 2.21
Zacks Consensus: 0.55 Zacks Consensus: 0.55 Zacks Consensus: 2.15 Zacks Consensus: 2.21
1 week Volume change -3.77%
Q1 0.00% Q2 0.00% F1 0.00% F2 0.00%
1 week Price Cng Rel to Industry -0.35%

(F1) EPS Est 1 week change 0.00%

Surprise Reported Earnings History
(F1) EPS Est 4 week change 0.00%

(F1) EPS Est 12 week change -1.07%

(Q1) EPS Est 1 week change 0.00%

Reported: 0.54 Reported: 0.53 Reported: 0.55 Reported: 0.58 Average 4 Qtr
Surprise
Estimate: 0.53 Estimate: 0.50 Estimate: 0.54 Estimate: 0.55
Q End 04/17 Q End 01/17 Q End 10/16 Q End 07/16

© 2017 Zacks Investment Research, All Rights Reserved 10 S. Riverside Plaza Suite 1600 · Chicago, IL 60606
 The data on the front page and all the charts in the report represent market data as of 07/31/17, while the report's text is as of
07/18/2017

Overview
Cisco Systems is an IP-based networking company, also offering
other products and services to service providers, companies,
commercial users and individuals. Total revenue was $12.63 billion in
FY16.

Cisco has three geographic segments. In 2016, the Americas

generated 60% of revenues, EMEA 25% and APJC 15%.

Cisco has 7 product categories: Switches aggregate and distribute

information, collecting LANs, MANs and WANs filtering, processing
and distributing it in the required volume and to the designated
locations. They provide connectivity to end users, workstations, IP
phones, access points and servers.

Next-Generation Network (NGN) Routers transport data, voice and

video information from one IP network to another. Collaboration
products integrate voice, video, data and mobile applications on fixed
and mobile networks. Key products are Unified Communications and
Cisco TelePresence Systems products.

Service Provider Video Systems include digital STBs and media

technology products for reception, encoding, transcoding, translating,
multiplexing, switching and modulation.

Wireless technology includes networking products: wireless LAN controllers, wireless integrated switches and routers, wireless
management software, wireless LAN clients and client software, bridges, antennas and accessories.

Security includes products and services preventing unauthorized access to system resources and protecting from worms, spam, viruses
and other malware. The Data Center product category includes Cisco Unified Computing System (UCS) and Server Access
Virtualization. It also comprises of The Other products segment and Related Services.

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 Reasons To Buy:
Cisco is the largest player in the networking space. According to research firm Order growth in new
Infonetics, Cisco is the top router and switch vendor. It also retained a leadership markets of the company
position in WLAN and Ethernet switching. The data center market is very strong where remained encouraging and
Cisco remains as the market leader. Therefore, while we continue to believe that a we are positive about the
certain amount of market share erosion is inevitable as competitors start making company’s market
aggressively-priced products of similar quality and customers think about second position, innovative
sourcing, it will take a lot to make a significant dent in Cisco’s revenues. Moreover, a prowess, product range,
new router product cycle is leading to increase in revenues. On the other hand, growth initiatives and
expansion into relatively under-penetrated markets will continue to drive growth. dividend payout.
Cisco’s focus on wireless carriers has increased of late, as evidenced by
acquisitions such as Intucell, BroadHop, Cognitive Security, Cariden, ClearAccess and Ubiquisis. With data demand exploding, the
wireless carrier segment has grown in importance. Mobile carriers in the U.S. are increasingly looking to make their networks more
spectrum-efficient and put their network resources to use without having to materially increase capex expenditure. Also, the
proliferation of smartphones has caused mobile data traffic to grow exponentially and the advent of high-speed LTE networks is
likely to accelerate that growth. Therefore, networking solutions that allow carriers to manage traffic efficiently are to become
increasingly important in the coming years.Cisco intends to tap this market by adding network management solutions to its product
portfolio and broadening its relationship with carriers. The increased carrier focus might help Cisco to gain share in the edge routing
segment, where its competitors, Juniper and Alcatel Lucent, have substantial market share. Also, these acquisitions show the
company’s intention to shore up its software and service capabilities in order to diversify its revenue streams toward sources of a
more recurring nature in order to mitigate the cyclicality associated with hardware sales.

In order to counter the threat of SDN, Cisco has devised a strategy of its own, which it is referring to as Application Centric
Infrastructure (ACI). ACI is a comprehensive approach that ties together physical and virtual compute, network and storage by
leveraging centralized policies and orchestration. ACI is made up of new hardware in the Nexus 9000 portfolio and software in the
shape of an updated NX-OS operating system along with the Application Policy Infrastructure Controller (APIC), which is the
centralized point for managing, monitoring and programming the ACI. The solution streamlines operational processes and reduces
operating expenses for power, cooling and cabling. This reduces the total cost of ownership by 75% when compared with software-
only network virtualization. The technology ensures the infrastructure is focused on the application. Nexus 9000 Series switches
deliver high scalability, performance and energy in a compact form factor and are ideal for data center aggregation- and access-
layer deployments in enterprise, service provider, and cloud networks. It is quite encouraging to see that Cisco’s ACI technology is
gaining significant traction with customers. We are positive about Cisco’s strategy to improve its focus on cloud computing.

The company has pioneered a network system, which has been referred to as the Unified Computing System (UCS). This is a
revolutionary blade server system based on x86 architecture that is transforming data centers. The system lowers the cost of
ownership by making the entire data center more network-centric, significantly reducing the number of computers/servers required.
The UCS is intended to simplify the operation of the data center, improving its flexibility and scalability. For this purpose, the
company has tied up with many companies including, Accenture, BMC, EMC, Intel, Microsoft, NetApp, Novell, Oracle, Red Hat and
VMWare. Although a bold initiative, the move placed Cisco on another level. The cost advantage afforded by the UCS system is its
most attractive feature. Therefore, in the current environment, the growing number of data centers across the world is working in
Cisco’s favor. UCS remains a major factor to Cisco's future success as the company builds its Next Generation Data Center stack.

Cisco has resorted to acquisitions to boost its network security capabilities and tap the solid growth prospects in the market.
The company’s recent plans to acquire a cloud-based security company, CloudLock, for $293 will further help the company to
increase its security market share. Cisco's other acquisition of Sourcefire and Meraki, have also been helping the company increase
its security market share.Currently, though the security solutions available in the market have elevated the level of security, the
administrative expenses have also risen exponentially. This has led to a need for an integrated security solution platform that
provides continuous detection, prevention and remediation of security threats without increasing administrative costs. Cisco is
increasingly moving toward an integrated operations and network management system that reduces the overall operating cost for its
primary clients. As the Internet security market is evolving rapidly, we believe these deals are an important move by the company.

Cisco has entered into a number of strategic alliances, striking deals with companies like Accenture Ltd, AT&T, Cap Gemini,Citrix,
EMC , Fujitsu, Intel, International Business Machines Corporation; Italtel SpA; Johnson ControlsInc.; Microsoft Corporation; NetApp,
Inc.; Deutsche Telekom; Oracle Corporation; Red Hat, Inc.; SAP AG; Sprint Nextel Corporation; Tata Consultancy Services Ltd.;
VCE Company, LLC (“VCE”);VMware, Inc.; Wipro Limited; Cloudera, Hortonworks and MapR and others. These alliances have
increased access to new technology, helped innovative product development, facilitated joint sales and marketing programs, and the
creation of new markets.

Cisco has been expanding into what management calls market adjacencies. This is basically a company initiative to use core
competencies supplemented by acquisitions to exploit opportunities in more than 30 adjacent markets. The company has made
some headway in three areas—smart connected communities, small business and smart grids. Management has discussed the
possibility of combining the small business offerings with cloud computing to enable the company’s partners to offer these

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 customers future Cisco products on an as-a-service basis. The smart grid program is intended to enable secure energy
management on electrical grids from the transmission to the consumption stage. To this end, Cisco has formedagreements with a
large number of companies, utilities and standards authorities. Other areas where it is seeing success include virtualization,
collaboration and video.

Cisco has a very strong balance sheet with around $71.8 billion in cash and highly liquid short-term investments, an increase of
$800 million from the previous quarter. Liquidity is quite good, with cash and short-term investments at roughly 56.2% of total
assets. Management returns value to customers through regular share repurchases and dividends. Cisco recently increased its
quarterly dividend by $0.03 to $0.29 per common share. In the last-reported quarter, Cisco bought back approximately 33 million
shares under the repurchase program.

Reasons To Sell:
Cisco continues to acquire a large number of companies. While this improves revenue Cisco is facing challenges
opportunities, it increases integration risks. The company operates in both developed in China, where it
and emerging economies; therefore there are many cultures and practices that have to generates a huge amount
be incorporated within it. When acquisitions are added to this, not only products and in annual sales. It also
platforms, but also corporate cultures have to be integrated. This takes up management faces the risk of integration
time and effort, which could have been used for organic growth. of acquired business and
from stiff competition.
Cisco has been forced to offer discounts and deals in response to actions by peers due
to stiff competition. The company, together with Juniper, serves almost 80% of the
core router market and enjoys the second position in the market. However, Alcatel-Lucent has now entered the market with its
Extensible Routing System (XRS) 7950 family of core routers. Cisco‘s competitors are revamping their product lines with faster and
power-efficient products. With 15% of Cisco’s sales coming from NGN routers in the reported quarter, the company is likely to feel
competitive pressure. Although the edge business remains strong, the competitive pressure at the core remains intense.

We note that the stock currently has a trailing 12 month P/S ratio of 3.28, which compares unfavorably to some extent with what the
industry saw over the last year. The ratio is higher than the average level of 3.24 and is close to the high end of the valuation range
over this period. Hence, valuation looks slightly stretched from a P/S perspective.

Last Earnings Report

Cisco reported third-quarter fiscal 2017 earnings (including stock-based compensation) of Quarter Ending 04/2017
$0.54 per share, beating the Zacks Consensus Estimate by $0.01.
Report Date May 17, 2017
Excluding stock-based compensation, earnings increased 5.3% on a year-over-year basis Sales Surprise 0.51%
to $0.60, which was slightly better than management’s guided range of $0.57–$0.59. The EPS Surprise 1.89%
growth reflected benefits from operational efficiencies that boost operating margin in the Quarterly EPS 0.54
quarter.
Annual EPS (TTM) 2.20

Revenues declined 0.5% year over year to $11.94 billion but beat the Zacks Consensus
Estimate of $11.89 billion. Management had anticipated revenues to decline in the range of
2% or remain flat on a year-over-year basis.

However, Cisco’s fourth-quarter outlook was disappointing. Revenues are anticipated to decline primarily due to lower order growth in
the reported quarter, which affected backlog. Management anticipates order growth to remain weak in the fourth-quarter, similar to the
third-quarter level.

Moreover, ongoing transition to subscription-based model will continue to hurt top-line. The company also expects macro-related
headwinds in the public sector, particularly the U.S. federal government business to impact revenues.

Further, weakness in the service provider business segment in the Americas and intensifying competition from the likes of Huawei in
the emerging markets are other concerns that will continue to hurt top-line growth.

Segment Revenue Details

On a year-over-year basis, products (74.4% of total revenue) remained almost flat at $8.89 billion, while services (25.6%) decreased
2.2% to $3.06 billion. Product book-to-bill ratio was greater than 1.

Almost 31% of the revenues were recurring in nature, of which 90% came from the services business. Roughly 10% of the product
revenues were recurring.

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 Under the Product category, Switching, Wireless, Security and Other increased 2%, 13%, 9%, and 57%, respectively, on a year-over-
year basis. However, this increase was partially offset by weak performance from NGN Routing, Collaboration, Data Center and Service
Provider Video segments which decreased 2%, 4%, 5% and 30%, respectively.

Geographically, on a year-over-year basis, revenues from the Americas and EMEA declined 4%, and 6%, respectively. Weak service
provider business in the Americas, foreign currency exchange volatility in the U.K. and oil price related uncertainty in the Middle East
hurt top-line growth.

APJC revenues increased 2% driven by solid growth in India and modest growth in Australia and Japan. Growth in China was affected
by tough year-over-year comparisons (due to service provider video business in the year-ago quarter).

Total emerging markets declined 12% while the BRICs plus Mexico (down 49% year over year) went down 10%.

In terms of customer segments enterprise declined 2%, public sector declined 4% and service provider dipped 10%. However,
commercial grew 3% (not as healthy as management anticipated) in the reported quarter. Weak European market impacted growth in
both enterprise and commercial segments.

Operating Details

Non-GAAP gross margin (including stock-based compensation) contracted 200 basis points (bps) from the year-ago quarter to 62% in
the reported quarter. The expansion can primarily be attributed to higher service gross margin (up 210 bps).

Operating expenses as percentage of revenues decreased 310 bps to 37.9% primarily owing to decrease in most of the expense line
items. As percentage of revenues, Research and development (R&D), General and Administrative (G&A) and Sales and Marketing
(S&M) expense declined 90 bps, 170 bps and 60 bps, respectively.

As a result, operating margin (including stock-based compensation) expanded 110 bps to 24.2%.

Acquisitions

Cisco completed the acquisition of AppDynamics during the quarter. Moreover, the company announced plans to acquire Viptela and
MindMeld.

Viptela is a privately held software-defined wide area network company. Per Cisco, Viptela combined with its IWAN technology, will
provide an industry-leading cloud-first software-defined (SD) WAN platform that addresses the Edge networking needs of the
company’s most demanding customers. The acquisition is expected to close in the second half of calendar 2017.

MindMeld is a privately held artificial intelligence (AI) company. Cisco expects MindMeld to simplify and enhance the collaboration
experience even further through the power of AI and machine learning.

MindMeld is expected to power new conversational interfaces for Cisco's collaboration products, simplifying user interaction with the
company’s technology as well as increasing ease-of-use and enabling new capabilities simultaneously. The acquisition is anticipated
to close in fourth-quarter fiscal 2017.

Cisco recently announced intent to acquire the Advanced Analytics team and associated advanced analytics intellectual property
developed by Saggezza, a privately held technology services company. The acquisition is expected to close in fourth-quarter fiscal
2017.

Balance Sheet and Cash Flow

Cisco exited the third quarter with cash and investments balance of almost $68 billion compared with $71.8 billion in the prior quarter.
Cash & cash equivalents and investments available in the U.S. at the end of quarter were $2.9 billion.

Cisco repurchased approximately 15 million shares of common stock for an aggregate purchase price of $0.5 billion. As of Apr 29,
2017, the remaining authorized amount under current share repurchase program is approximately $12.9 billion.

Guidance

For fourth-quarter fiscal 2017, revenues are expected to decline in the range of 6–4% on a year-over-year basis. Non-GAAP earnings
are anticipated to be in the range $0.60–$0.62 per share.

Gross margin is expected to be in the range of 63–64%, while operating margin is anticipated between 29.5% and 30.5% for the
quarter.

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 Recent News
Cisco also recently announced that it has signed up as a provider of connectivity hardware and software solutions for the
Commonwealth Games to be held in 2018.

On Jul 13, 2017, Cisco reportedly acquired Observable Networks, a network behaviour monitoring startup.

On Jun 6, 2017, Cisco declared a quarterly dividend of $0.29 per common share to be paid on Jul 26, 2017 to all shareholders of
record as of the close of business on Jul 7, 2017.

On May 31, 2017, Cisco and IBM announced a collaboration to fight against growing instances of cybercrime. As part of the agreement,
Cisco will create applications for IBM's QRadar security analytics platform.

On May 26, 2017, Cisco completed the acquisition of MindMeld, an artificial intelligence company.

On May 1, 2017, Cisco announced its intention to acquire Viptela.

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 Industry Analysis Zacks Industry Rank: 176 / 265 (Bottom 34%) Top Peers

Digi International Inc. (DGII)

Radcom Ltd. (RDCM)
iPass Inc. (IPAS)
Allot Communications Ltd. (ALLT)
Silver Spring Networks, Inc. (SSNI)
Extreme Networks, Inc. (EXTR)
NetScout Systems, Inc. (NTCT)
Infinera Corporation (INFN)

Industry Comparison Computer - Networking | Position in Industry: 2 of 11 Industry Peers

CSCO X Industry S&P 500 BRCD NTGR NTCT

VGM Score - -
Market Cap 157.25 B 32.23 M 21.03 B 5.18 B 1.55 B 3.09 B
# of Analysts 18 4 14 9 3 6
Dividend Yield 3.04% 0.00% 1.82% 1.05% 0.00% 0.00%

Value Score - -
Cash/Price 4.07 -1.65 9.94 1.12 -11.87 9.52
EV/EBITDA 7.46 7.46 12.68 11.77 8.48 13.45
PEG Ratio 1.95 1.90 1.98 31.57 NA 1.40
Price/Book (P/B) 2.41 1.96 3.19 2.00 2.10 1.38
Price/Cash Flow (P/CF) 12.15 3.59 13.51 13.82 15.93 13.50
P/E (F1) 14.61 20.35 18.78 210.50 21.67 20.35
Price/Sales (P/S) 3.28 2.12 2.47 2.17 1.12 2.62
Earnings Yield 6.82% 0.51% 5.27% 0.48% 4.43% 4.86%
Debt/Equity 0.43 0.00 0.68 0.57 0.00 0.13
Cash Flow ($/share) 2.60 0.23 5.43 1.18 3.72 3.43

Growth Score - -
Hist. EPS Growth (3-5 yrs) 2.79% -19.79% 7.13% -91.43% -15.57% 5.81%
Proj. EPS Growth (F1/F0) 0.57% -17.78% 9.33% -92.41% -17.78% 1.66%
Curr. Cash Flow Growth 3.05% -1.53% 5.35% 0.92% 22.96% 24.00%
Hist. Cash Flow Growth (3-5 yrs) 4.89% 4.87% 6.55% 4.87% 2.34% 40.32%
Current Ratio 3.52 2.70 1.35 2.48 2.94 1.75
Debt/Capital 30.15% 0.00% 41.73% 36.40% 0.00% 11.46%
Net Margin 20.61% -2.60% 9.63% 2.54% 5.42% 1.60%
Return on Equity 16.93% 6.41% 15.87% 12.49% 11.29% 6.41%
Sales/Assets 0.39 0.70 0.54 0.48 1.22 0.33
Proj. Sales Growth (F1/F0) -2.57% 0.00% 4.95% 1.95% 4.20% -1.76%

Momentum Score - -
Daily Price Chg -0.22% 0.00% 0.02% 0.40% -4.49% -0.72%
1 Week Price Chg -0.35% 0.94% -0.00% 0.94% 9.07% 3.16%
4 Week Price Chg 0.38% 0.00% 1.08% -0.24% 9.99% -0.86%
12 Week Price Chg -8.28% 0.00% 3.44% 0.32% 4.13% 1.62%
52 Week Price Chg 2.34% -2.56% 10.43% 36.99% -9.35% 25.18%
20 Day Average Volume 16,641,368 29,260 0 5,475,055 384,588 921,765
(F1) EPS Est 1 week change 0.00% 0.00% 0.00% 0.00% -0.45% 0.44%
(F1) EPS Est 4 week change 0.00% 0.00% 0.28% 0.00% -0.45% 0.44%
(F1) EPS Est 12 week change -1.07% -12.94% 1.00% 20.00% -0.45% -6.09%
(Q1) EPS Est Mthly Chg 0.00% 0.00% 0.00% 0.00% 0.00% -7.21%

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 Zacks Rank Education
The Zacks Rank is calculated from four primary inputs: Agreement, Magnitude, Upside and Surprise.

Agreement
This is the extent which brokerage analysts are revising their earnings estimates in the same
direction. The greater the percentage of estimates being revised higher, the better the score for this
component.

For example, if there were 10 estimate revisions over the last 60 days, with 8 of those revisions up,
and the other 2 down, then the agreement factor would be 80% positive. If, however, 8 were to the
downside with only 2 of them up, then the agreement factor would be 80% negative. The higher the
percentage of agreement the better.

Magnitude
This is a measure based on the size of the recent change in the current consensus estimates. The
Zacks Rank looks at the magnitude of these changes over the last 60 days.

In the chart to the right, the display shows the consensus estimate from 60-days ago, 30-days ago,
7-days ago, and the most current estimate The difference between the current estimate and the
estimate from 60-days ago is displayed as a percentage. A larger positive percentage increase will
score better on this component.

Upside
This is the difference between the most accurate estimate, as calculated by Zacks, and the
consensus estimate. For example, a stock with a consensus estimate of $1.00, and a most
accurate estimate of $1.05 will have an upside factor of 5%.

This is not an indication of how much a stock will go up or down. Instead, it's a measure of the
difference between these two estimates. This is particularly useful near earnings season as a
positive upside percentage can be used to help predict a future surprise.

Surprise
The Zacks Rank also factors in the last few quarters of earnings surprises. Companies that have
positively surprised in the recent past have a tendency of positively surprising again in the future (or
missing if they recently missed).

A stock with a recent track record of positive surprises will score better on this factor than a stock
with a history of negative surprises. These stocks will have a greater likelihood of positively
surprising again.

Zacks Style Score Education

The Zacks Style Score is as a complementary indicator to the Zacks Rank, giving investors a way to
focus on the best Zacks Rank stocks that best fit their own stock picking preferences. Value Score

Academic research has proven that stocks with the best Growth, Value, and Momentum Growth Score
characteristics outperform the market. The Zacks Style Scores rate stocks on each of these
individual styles and assigns a rating of A, B, C, D and F. An A, is better than a B; a B is better than Momentum Score
a C; and so on.
VGM Score
As an investor, you want to buy stocks with the highest probability of success. That means buying
stocks with a Zacks Rank #1 or #2, Strong Buy or Buy, which also has a Style Score of an A or a B.

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 Disclosures
The analysts contributing to this report do not hold any shares of this stock. The EPS and revenue forecasts are the Zacks
Consensus estimates. Additionally, the analysts contributing to this report certify that the views expressed herein accurately reflect the
analysts' personal views as to the subject securities and issuers. Zacks certifies that no part of the analysts compensation was, is, or
will be, directly or indirectly, related to the specific recommendation or views expressed by the analyst in the report. Additional
information on the securities mentioned in this report is available upon request. This report is based on data obtained from sources we
believe to be reliable, but is not guaranteed as to accuracy and does not purport to be complete. Because of individual objectives, the
report should not be construed as advice designed to meet the particular investment needs of any investor. Any opinions expressed
herein are subject to change. This report is not to be construed as an offer or the solicitation of an offer to buy or sell the securities
herein mentioned. Zacks or its officers, employees or customers may have a position long or short in the securities mentioned and buy
or sell the securities from time to time. Zacks uses the following rating system for the securities it covers which results from a
proprietary quantitative model using trends in earnings estimate revisions. This model is proven most effective for judging the timeliness
of a stock over the next 1 to 3 months. The model assigns each stock a rank from 1 through 5. Zacks Rank 1 = Strong Buy. Zacks Rank
2 = Buy. Zacks Rank 3 = Hold. Zacks Rank 4 = Sell. Zacks Rank 5 = Strong Sell. We also provide a Zacks Industry Rank for each
company which provides an idea of the near-term attractiveness of a company s industry group. We have 264 industry groups in total.
Thus, the Zacks Industry Rank is a number between 1 and 264. In terms of investment attractiveness, the higher the rank the better.
Historically, the top half of the industries has outperformed the general market.

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