CISCO SYSTEMS INC (CSCO) Stock Fundamental Analysis
NASDAQ:CSCO - Nasdaq - US17275R1023 - Common Stock - Currency: USD
We assign a fundamental rating of 6 out of 10 to CSCO. CSCO was compared to 50 industry peers in the Communications Equipment industry. While CSCO has a great profitability rating, there are some minor concerns on its financial health. CSCO has a correct valuation and a medium growth rate.
1. Profitability
1.1 Basic Checks
CSCO had positive earnings in the past year.
In the past year CSCO had a positive cash flow from operations.
CSCO had positive earnings in each of the past 5 years.
CSCO had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
Looking at the Return On Assets, with a value of 8.17%, CSCO belongs to the top of the industry, outperforming 86.00% of the companies in the same industry.
CSCO has a Return On Equity of 21.32%. This is amongst the best in the industry. CSCO outperforms 90.00% of its industry peers.
CSCO's Return On Invested Capital of 11.30% is amongst the best of the industry. CSCO outperforms 82.00% of its industry peers.
CSCO had an Average Return On Invested Capital over the past 3 years of 15.60%. This is in line with the industry average of 13.82%.
The last Return On Invested Capital (11.30%) for CSCO is well below the 3 year average (15.60%), which needs to be investigated, but indicates that CSCO had better years and this may not be a problem.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.17% | ||
| ROE | 21.32% | ||
| ROIC | 11.3% |
ROA(3y)11.08%
ROA(5y)11.19%
ROE(3y)26.95%
ROE(5y)27.21%
ROIC(3y)15.6%
ROIC(5y)15.96%
1.3 Margins
With an excellent Profit Margin value of 17.60%, CSCO belongs to the best of the industry, outperforming 92.00% of the companies in the same industry.
CSCO's Profit Margin has declined in the last couple of years.
With an excellent Operating Margin value of 21.81%, CSCO belongs to the best of the industry, outperforming 92.00% of the companies in the same industry.
CSCO's Operating Margin has declined in the last couple of years.
CSCO has a Gross Margin of 65.24%. This is amongst the best in the industry. CSCO outperforms 90.00% of its industry peers.
CSCO's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 21.81% | ||
| PM (TTM) | 17.6% | ||
| GM | 65.24% |
OM growth 3Y-4.32%
OM growth 5Y-2.87%
PM growth 3Y-3.37%
PM growth 5Y-3.05%
GM growth 3Y0.37%
GM growth 5Y0.56%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so CSCO is still creating some value.
The number of shares outstanding for CSCO has been reduced compared to 1 year ago.
CSCO has less shares outstanding than it did 5 years ago.
The debt/assets ratio for CSCO is higher compared to a year ago.
2.2 Solvency
CSCO has an Altman-Z score of 2.99. This indicates that CSCO is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of CSCO (2.99) is better than 70.00% of its industry peers.
The Debt to FCF ratio of CSCO is 2.29, which is a good value as it means it would take CSCO, 2.29 years of fcf income to pay off all of its debts.
With a decent Debt to FCF ratio value of 2.29, CSCO is doing good in the industry, outperforming 68.00% of the companies in the same industry.
A Debt/Equity ratio of 0.59 indicates that CSCO is somewhat dependend on debt financing.
CSCO's Debt to Equity ratio of 0.59 is on the low side compared to the rest of the industry. CSCO is outperformed by 70.00% of its industry peers.
Even though the debt/equity ratio score it not favorable for CSCO, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.59 | ||
| Debt/FCF | 2.29 | ||
| Altman-Z | 2.99 |
ROIC/WACC1.14
WACC9.92%
2.3 Liquidity
CSCO has a Current Ratio of 0.95. This is a bad value and indicates that CSCO is not financially healthy enough and could expect problems in meeting its short term obligations.
CSCO's Current ratio of 0.95 is on the low side compared to the rest of the industry. CSCO is outperformed by 84.00% of its industry peers.
A Quick Ratio of 0.87 indicates that CSCO may have some problems paying its short term obligations.
CSCO's Quick ratio of 0.87 is on the low side compared to the rest of the industry. CSCO is outperformed by 76.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.95 | ||
| Quick Ratio | 0.87 |
3. Growth
3.1 Past
The earnings per share for CSCO have decreased by -8.00% in the last year.
The Earnings Per Share has been growing slightly by 3.84% on average over the past years.
The Revenue has been growing slightly by 0.47% in the past year.
Measured over the past years, CSCO shows a small growth in Revenue. The Revenue has been growing by 0.72% on average per year.
EPS 1Y (TTM)-8%
EPS 3Y5.02%
EPS 5Y3.84%
EPS Q2Q%9.09%
Revenue 1Y (TTM)0.47%
Revenue growth 3Y2.6%
Revenue growth 5Y0.72%
Sales Q2Q%11.39%
3.2 Future
The Earnings Per Share is expected to grow by 6.50% on average over the next years.
The Revenue is expected to grow by 4.73% on average over the next years.
EPS Next Y3.63%
EPS Next 2Y4.92%
EPS Next 3Y5.99%
EPS Next 5Y6.5%
Revenue Next Year5.43%
Revenue Next 2Y5.33%
Revenue Next 3Y5.11%
Revenue Next 5Y4.73%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
CSCO is valuated rather expensively with a Price/Earnings ratio of 18.85.
74.00% of the companies in the same industry are more expensive than CSCO, based on the Price/Earnings ratio.
Compared to an average S&P500 Price/Earnings ratio of 27.45, CSCO is valued a bit cheaper.
The Price/Forward Earnings ratio is 16.89, which indicates a correct valuation of CSCO.
Based on the Price/Forward Earnings ratio, CSCO is valued a bit cheaper than the industry average as 68.00% of the companies are valued more expensively.
CSCO's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 21.90.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.85 | ||
| Fwd PE | 16.89 |
4.2 Price Multiples
66.00% of the companies in the same industry are more expensive than CSCO, based on the Enterprise Value to EBITDA ratio.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of CSCO indicates a somewhat cheap valuation: CSCO is cheaper than 66.00% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 21.46 | ||
| EV/EBITDA | 18.08 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates CSCO does not grow enough to justify the current Price/Earnings ratio.
CSCO has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)5.19
PEG (5Y)4.91
EPS Next 2Y4.92%
EPS Next 3Y5.99%
5. Dividend
5.1 Amount
CSCO has a Yearly Dividend Yield of 2.38%.
Compared to an average industry Dividend Yield of 3.49, CSCO pays a better dividend. On top of this CSCO pays more dividend than 86.00% of the companies listed in the same industry.
CSCO's Dividend Yield is comparable with the S&P500 average which is at 2.42.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.38% |
5.2 History
The dividend of CSCO has a limited annual growth rate of 3.23%.
CSCO has been paying a dividend for at least 10 years, so it has a reliable track record.
CSCO has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)3.23%
Div Incr Years13
Div Non Decr Years13
5.3 Sustainability
65.54% of the earnings are spent on dividend by CSCO. This is not a sustainable payout ratio.
CSCO's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP65.54%
EPS Next 2Y4.92%
EPS Next 3Y5.99%
69.37
+0.78 (+1.14%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryCommunications Equipment
Earnings (Last)
Earnings (Next)
Inst Owners81.14%
Inst Owner Change1.93%
Ins Owners0.03%
Ins Owner Change-3.07%
Market Cap274.71B
Analysts78.67
Price Target72.15 (4.01%)
Short Float %1.05%
Short Ratio1.99
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.38% |
Yearly Dividend1.58
Dividend Growth(5Y)3.23%
DP65.54%
Div Incr Years13
Div Non Decr Years13
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)1.94%
Min EPS beat(2)1.37%
Max EPS beat(2)2.52%
EPS beat(4)4
Avg EPS beat(4)1.74%
Min EPS beat(4)0.58%
Max EPS beat(4)2.52%
EPS beat(8)8
Avg EPS beat(8)3.07%
EPS beat(12)11
Avg EPS beat(12)2.24%
EPS beat(16)12
Avg EPS beat(16)1.71%
Revenue beat(2)0
Avg Revenue beat(2)-1.31%
Min Revenue beat(2)-1.48%
Max Revenue beat(2)-1.14%
Revenue beat(4)0
Avg Revenue beat(4)-1.32%
Min Revenue beat(4)-1.48%
Max Revenue beat(4)-1.14%
Revenue beat(8)0
Avg Revenue beat(8)-1.22%
Revenue beat(12)2
Avg Revenue beat(12)-0.83%
Revenue beat(16)2
Avg Revenue beat(16)-1.3%
PT rev (1m)3.36%
PT rev (3m)1.87%
EPS NQ rev (1m)0%
EPS NQ rev (3m)3.03%
EPS NY rev (1m)0.49%
EPS NY rev (3m)1.91%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.67%
Revenue NY rev (1m)0.03%
Revenue NY rev (3m)0.39%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.85 | ||
| Fwd PE | 16.89 | ||
| P/S | 4.94 | ||
| P/FCF | 21.46 | ||
| P/OCF | 20.07 | ||
| P/B | 5.98 | ||
| P/tB | N/A | ||
| EV/EBITDA | 18.08 |
EPS(TTM)3.68
EY5.3%
EPS(NY)4.11
Fwd EY5.92%
FCF(TTM)3.23
FCFY4.66%
OCF(TTM)3.46
OCFY4.98%
SpS14.05
BVpS11.6
TBVpS-5.74
PEG (NY)5.19
PEG (5Y)4.91
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.17% | ||
| ROE | 21.32% | ||
| ROCE | 14.23% | ||
| ROIC | 11.3% | ||
| ROICexc | 13.7% | ||
| ROICexgc | 196.3% | ||
| OM | 21.81% | ||
| PM (TTM) | 17.6% | ||
| GM | 65.24% | ||
| FCFM | 23.02% |
ROA(3y)11.08%
ROA(5y)11.19%
ROE(3y)26.95%
ROE(5y)27.21%
ROIC(3y)15.6%
ROIC(5y)15.96%
ROICexc(3y)22.29%
ROICexc(5y)24.14%
ROICexgc(3y)203.21%
ROICexgc(5y)218.11%
ROCE(3y)19.37%
ROCE(5y)19.54%
ROICexcg growth 3Y-12.42%
ROICexcg growth 5Y-32.21%
ROICexc growth 3Y-16.83%
ROICexc growth 5Y-15.54%
OM growth 3Y-4.32%
OM growth 5Y-2.87%
PM growth 3Y-3.37%
PM growth 5Y-3.05%
GM growth 3Y0.37%
GM growth 5Y0.56%
F-Score7
Asset Turnover0.46
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.59 | ||
| Debt/FCF | 2.29 | ||
| Debt/EBITDA | 1.79 | ||
| Cap/Depr | 29.54% | ||
| Cap/Sales | 1.59% | ||
| Interest Coverage | 7.57 | ||
| Cash Conversion | 90.46% | ||
| Profit Quality | 130.75% | ||
| Current Ratio | 0.95 | ||
| Quick Ratio | 0.87 | ||
| Altman-Z | 2.99 |
F-Score7
WACC9.92%
ROIC/WACC1.14
Cap/Depr(3y)33.43%
Cap/Depr(5y)36.01%
Cap/Sales(3y)1.22%
Cap/Sales(5y)1.32%
Profit Quality(3y)119.27%
Profit Quality(5y)125.58%
High Growth Momentum
Growth
EPS 1Y (TTM)-8%
EPS 3Y5.02%
EPS 5Y3.84%
EPS Q2Q%9.09%
EPS Next Y3.63%
EPS Next 2Y4.92%
EPS Next 3Y5.99%
EPS Next 5Y6.5%
Revenue 1Y (TTM)0.47%
Revenue growth 3Y2.6%
Revenue growth 5Y0.72%
Sales Q2Q%11.39%
Revenue Next Year5.43%
Revenue Next 2Y5.33%
Revenue Next 3Y5.11%
Revenue Next 5Y4.73%
EBIT growth 1Y-17.55%
EBIT growth 3Y-1.84%
EBIT growth 5Y-2.17%
EBIT Next Year17.34%
EBIT Next 3Y7.96%
EBIT Next 5YN/A
FCF growth 1Y-23.98%
FCF growth 3Y-11.56%
FCF growth 5Y-7.31%
OCF growth 1Y-22.21%
OCF growth 3Y-11.04%
OCF growth 5Y-7.23%