CSCO  Cisco Systems Inc.

Exchange

NASDAQ

Sector

Technology

Industry

Computer Communications Equipment

Market Cap.

24454.48B

Vuru Grade

79.14/100

Current Price

$33.74
+0.14 (+0.42%)

Growth Price

$30.73
Overvalued by 8.92%

Stability Price

$9.63
Overvalued by 71.45%

Company Metrics

  • P/E 15.99
  • P/S 501.4
  • P/B 2.64
  • EPS 2.09
  • Cash ROIC 38.82%
  • Cash Ratio 2.64
  • Dividend 1.04 / 3.1%
  • Avg. Vol. 22.97M
  • Shares 5.09B
  • Market Cap. 24454.48B

Company Description

Cisco Systems, Inc. designs, manufactures, and sells Internet protocol (IP)-based networking and other products related to the communications and information technology industry worldwide. It offers routers that interconnect public and private IP networks for mobile, data, voice, and video applications; switching products, which offer connectivity to end users, workstations, IP phones, access poin... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Better Buy: Cisco Systems, Inc. vs. General Electric
Motley Fool - Feb 14, 2017
At first glance, Cisco (NASDAQ:CSCO) and General Electric (NYSE:GE) don't seem that similar. The former sells networking hardware and software, while the latter sells a wide array of industrial products and services for the utility, healthcare ...
Cisco Systems: A True Cash Cow - Seeking Alpha
Why Cisco Earnings Aren't Enough for Investors - 24/7 Wall St.
3 Big Bets Cisco Systems, Inc. Is Making -- Will They Be Enough?
Motley Fool - Feb 10, 2017
In February, the company launched Cisco Firepower, a new firewall series, and the company says its advanced security systems have been proven to help customers "dramatically reduce time to detection of attacks." Throughout the year, the company also ...
Cisco Systems Inc Risk Points versus Technology - CML News
Revenue Estimates Analysis: Cisco Systems, Inc. (NASDAQ:CSCO) - News Oracle
Cisco: Are You Paying Attention To The Revenue Pipeline?
Seeking Alpha - Feb 17, 2017
As I mentioned yesterday, Cisco Systems (NASDAQ:CSCO) reported a decent F2Q17 that, while not impressive enough to cause excitement, marginally beat revenue and earnings expectations.
Cisco Systems, Inc. (CSCO) Beats Estimates, Hikes Dividend - Investorplace.com
Cisco Systems, Inc., SunPower Corporation Shares Fall After Earnings - ValueWalk
Earnings Reaction History: Cisco Systems, Inc., 60.0% Follow-Through Indicator ...
Nasdaq - Feb 15, 2017
Cisco Systems, Inc. ( CSCO ) is due to issue its quarterly earnings report in the upcoming extended-hours session. Given its history, traders can expect very active trading in the issue immediately following its quarterly earnings announcement ...
Cisco Systems Reaches Analyst Target Price
Nasdaq - Feb 17, 2017
In recent trading, shares of Cisco Systems Inc (Symbol: CSCO) have crossed above the average analyst 12-month target price of $32.89, changing hands for $33.60/share.
Cisco profit beats on strong demand for security products
Reuters - Feb 15, 2017
Cisco Systems Inc (CSCO.O) reported higher-than-expected quarterly revenue and profit, helped mainly by strong demand for its security products.
Cisco Systems, Inc. Shareholders Could Be Rewarded by Trump
Income Investors - Feb 4, 2017
Cisco Systems, Inc. (NASDAQ:CSCO) stock is a technology company with operations around the globe. There are many advantages to a global presence, such as generating revenue in many different currencies (and reaching many more wallets in the first ...
Cisco Systems Inc. (CSCO) Closes 0.48% Up on the Day for February 07 - Equities.com
Cisco earnings: Will big bets on software pay off?
MarketWatch - Feb 14, 2017
Earnings: Analysts polled by FactSet on average expect Cisco to report profit of 56 cents a share, after adjusting for stock-based compensation and other effects.
3 Stocks to Watch on Thursday: Barrick Gold Corporation (USA) (ABX), Cisco ...
Investorplace.com - Feb 16, 2017
It was another strong day for U.S. equities, while oil was weaker by 0.2% and treasury bonds were also weaker. The S&P 500 Index and Dow Jones Industrial Average gained 0.5% apiece, while the Nasdaq Composite surged 0.6%.
Barrick Gold, Cisco, NetEase Upgraded - Schaeffers Research (blog)
Owning Cisco With Less Risk
Seeking Alpha - Feb 15, 2017
With Cisco (NASDAQ:CSCO) set to release earnings after the close, the amateur analysts at crowd-sourced start-up Estimize are collectively more bullish than Wall Street analysts whose consensus number is inline with Cisco's guidance (we have no ...
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for CSCO to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate CSCO's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$33.74 Current Price

$30.73 Growth Price (DCF)

Overvalued by 8.92%


Growth Rate Assumed by Market: 7.58%


Future Free Cash Flow Growth Rate: 3.8%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$9.63 Stability Price (EPV)

Overvalued by 71.45%


Discount Rate: 15.0%

$4.06 NCA Price

Overvalued by 87.97%

$35.93 Book Price

Undervalued by 6.50%


Excellent Cash Return on Invested Capital over the past 5 years

CSCO has efficiently invested its financial resources in buildings, projects, and equipment, resulting in strong returns. Annual Reports can be useful in identifying the cause of one-time events and future sustainability.

CSCO has created $38.82 of cash for every $100 invested.
Figures in USD. Fiscal year ends in July
20122013201420152016
Free Cash Flow 10.37B 11.73B 11.06B 11.33B 12.42B
divided by
Invested Capital 25.31B 28.39B 33.25B 29.44B 30.99B
Cash ROIC 40.95% 41.33% 33.25% 38.47% 40.10%

Excellent Return on Equity over the past 5 years

Over the past 5 years, CSCO has generated strong profits with money shareholders have invested. This is considered one of the best indicators of quality management. Beware of extremely high Return on Equity (> 50%) as this is often unsustainable.

CSCO has generated $15.67 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in July
20122013201420152016
Net Income 8.04B 9.98B 7.85B 8.98B 10.74B
divided by
Stockholders' Equity 51.29B 59.12B 56.65B 59.70B 63.59B
Return on Equity 15.68% 16.89% 13.86% 15.04% 16.89%

Excellent Business Performance over the past 10 years

CSCO has been able to maintain profitability in good times and bad. This could mean CSCO has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

CSCO has created positive free cash flow for 9 or more of the past 10 years.
Figures in USD. Fiscal year ends in July
2007200820092010201120122013201420152016
Free Cash Flow 8.85B 10.82B 8.89B 9.17B 8.91B 10.37B 11.73B 11.06B 11.33B 12.42B

Very Strong Balance Sheet

CSCO has more Cash than its Total Liabilities, resulting in $1.51 Net Cash per share. In other words, if you buy CSCO today, the price you're paying for shares is actually $32.23 because $1.51 of Cash is included in the current share price. This much Cash is very healthy. It can help CSCO sustain itself in the face of any economic turmoil and makes a stock buyback more of a possibility.
Figures in USD. Fiscal year ends in July
2007200820092010201120122013201420152016
Cash 22.27B 26.24B 35.00B 39.86B 44.59B 48.72B 50.61B 52.07B 60.42B 65.76B
Current Assets 31.57B 35.70B 44.18B 51.42B 57.23B 61.93B 65.52B 67.11B 76.28B 78.72B
Total Assets 53.34B 58.73B 68.13B 81.13B 87.10B 91.76B 101.19B 105.13B 113.48B 121.65B
Current Liabilities 13.36B 13.86B 13.66B 19.23B 17.51B 17.73B 22.19B 19.81B 23.62B 24.91B
Total Liabilities 21.86B 24.38B 29.48B 36.86B 39.87B 40.47B 42.07B 48.48B 53.78B 58.07B
Stockholder' Equity 31.48B 34.35B 38.65B 44.27B 47.23B 51.29B 59.12B 56.65B 59.70B 63.59B
Current Ratio 2.36 2.58 3.24 2.67 3.27 3.49 2.95 3.39 3.23 3.16
TL-to-TA 0.41 0.42 0.43 0.45 0.46 0.44 0.42 0.46 0.47 0.48

Consistent Reinvestment of Profits over the past 10 years

CSCO has consistently retained profits. This may put CSCO in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, CSCO can greatly improve their long-term economic picture.
Figures in USD. Fiscal year ends in July
2007200820092010201120122013201420152016
Retained Earnings 231.00M 120.00M 3.87B 5.85B 7.28B 11.35B 16.22B 14.09B 16.05B 19.40B
Retained Earnings Growth - -48.05% 3,123.33% 51.27% 24.49% 55.88% 42.81% -13.09% 13.85% 20.89%

Potential Competitive Advantage over the past 10 years

CSCO potentially has a competitive advantage. This could be strong branding, the ability to keep costs low, or some other characteristic that is hard to replicate. Look at its future prospects to determine sustainability and whether the economic moat will strengthen.

$18.75 of every $100 of Revenue have been pure profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in July
2007200820092010201120122013201420152016
Net Income 7.33B 8.05B 6.13B 7.77B 6.49B 8.04B 9.98B 7.85B 8.98B 10.74B
divided by
Revenue 34.92B 39.54B 36.12B 40.04B 43.22B 46.06B 48.61B 47.14B 49.16B 49.25B
Net Profit Margin 21.00% 20.36% 16.98% 19.40% 15.02% 17.46% 20.54% 16.66% 18.27% 21.81%

Strong Pricing Power over the past 10 years

CSCO has maintained substantial gross margins, suggesting that they have been able to set prices without consideration of the cost of goods sold. This potentially leaves flexibility in inflationary environments to raise prices on consumers and maintain profitability.

$62.18 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in July
2007200820092010201120122013201420152016
Gross Profit 22.34B 25.48B 23.09B 25.64B 26.54B 28.21B 29.44B 27.77B 29.68B 30.96B
divided by
Revenue 34.92B 39.54B 36.12B 40.04B 43.22B 46.06B 48.61B 47.14B 49.16B 49.25B
Gross Margin 63.96% 64.45% 63.94% 64.04% 61.40% 61.24% 60.57% 58.91% 60.38% 62.87%

Low Capital Intensity over the past 10 years

CSCO has consistently used a small portion of their Net Income buying new equipment or investing in new facilities. This indicates that CSCO may require minimal investment to stay competitive. This leaves them with extra money to spend on growing their business and potentially buying back stock.

14.65% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in July
2007200820092010201120122013201420152016
Capital Expenditure 1.25B 1.27B 1.01B 1.01B 1.17B 1.13B 1.16B 1.28B 1.23B 1.15B
divided by
Net Income 7.33B 8.05B 6.13B 7.77B 6.49B 8.04B 9.98B 7.85B 8.98B 10.74B
Capital Expenditure Ratio 17.06% 15.75% 16.38% 12.98% 18.09% 14.00% 11.62% 16.24% 13.66% 10.67%

No Dividend History over the past 10 years

CSCO has never distributed dividends or has recently suspended their dividend distribution.
Figures in USD. Fiscal year ends in July
2007200820092010201120122013201420152016
Dividend Paid - - - - - - - - - -
divided by
Shares Outstanding 6.27B 6.16B 5.86B 5.85B 5.56B 5.40B 5.38B 5.28B 5.15B 5.09B
Dividend Paid Per Share - - - - - - - - - -
Price at Year End 27.16 16.00 23.83 19.94 18.02 19.45 22.25 28.37 27.53 30.22
Dividend Yield - - - - - - - - - -

Strong History of Stock Buybacks over the past 10 years

CSCO has a strong history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in July
2007200820092010201120122013201420152016
Shares Outstanding 6.27B 6.16B 5.86B 5.85B 5.56B 5.40B 5.38B 5.28B 5.15B 5.09B
Stock Bought Back - 1.66% 5.22% 0.15% 5.12% 2.94% 0.45% 1.87% 2.62% 1.14%
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Discussion
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3
Posted by hurling  (on April 23, 2012)
As of today based on the fundamentals CSCO would be fairly valued at $31.07. I would put a one year target on the stock of $32.75 based on expected growth and acquisitions.

You are looking at a company with very little debt and a large moat. Cisco remains the industry standard in networking and IP phones. They continue to be one of the leaders in firewalls. The Cisco UCS product has put them in the top three for servers. This is an extremely profitable market and the server market should continue to grow due to the fact that servers have a specific lifespan (so there's a built in replacement factor) as well as the fact that computing environments continue to need more resources.
1
Posted by timholland  (on April 25, 2012)
I agree. CSCO is a great company. But, what assumptions are you using to get your $31 price target?

To hit it, i'm having to move the annual growth rate up to 15%.
1
Posted by hurling  (on April 25, 2012)
$31.07 was my fair value estimate based on the fundamentals and a growth rate of 9.4 percent as well as a fair estimate of patent values and cash/invested income on hand. On a straight valuation I calculate the company to be worth $23.50 a share.
1
Posted by ValueHunter  (on August 3, 2016)
Better Buy: Cisco Systems vs. Oracle

http://www.fool.com/investing/2016/07/26/better-buy-cisco-systems-vs-oracle.aspx
0
Posted by NYZ93  (on May 8, 2012)
Earnings are expected to be positive. We'll see
0
Posted by Robert.T  (on March 18, 2012)
Fairly valued at best. Not the most exciting company too. The run is over. Anyone who thinks this will hit $30 is crazy.
7
Posted by formerhedgie  (on March 19, 2012)
Disagree. Historically, it’s traded at a way higher multiple than it is currently. CSCO’ll hit $30 no problem. High quality companies with a large market cap get huge volume. The market will move on this stock.
2
Posted by James.H  (on June 25, 2012)
Hi Robert,

How are you calculating the fair value?
-6
Posted by maryabrooks41  (on June 26, 2012)
If i wanna invest in this business how and like how much i will get to invest and how much would be my income