CISCO SYSTEMS INC (CSCO) Stock Fundamental Analysis
NASDAQ:CSCO - Nasdaq - US17275R1023 - Common Stock - Currency: USD
CSCO gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 48 industry peers in the Communications Equipment industry. While CSCO belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. CSCO has a decent growth rate and is not valued too expensively.
1. Profitability
1.1 Basic Checks
In the past year CSCO was profitable.
In the past year CSCO had a positive cash flow from operations.
CSCO had positive earnings in each of the past 5 years.
Each year in the past 5 years CSCO had a positive operating cash flow.
1.2 Ratios
With an excellent Return On Assets value of 8.17%, CSCO belongs to the best of the industry, outperforming 83.33% of the companies in the same industry.
CSCO has a better Return On Equity (21.32%) than 89.58% of its industry peers.
The Return On Invested Capital of CSCO (11.30%) is better than 81.25% of its industry peers.
The Average Return On Invested Capital over the past 3 years for CSCO is in line with the industry average of 14.31%.
The 3 year average ROIC (15.60%) for CSCO is well above the current ROIC(11.30%). The reason for the recent decline needs to be investigated.
| 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
CSCO's Profit Margin of 17.60% is amongst the best of the industry. CSCO outperforms 91.67% of its industry peers.
In the last couple of years the Profit Margin of CSCO has declined.
With an excellent Operating Margin value of 21.81%, CSCO belongs to the best of the industry, outperforming 91.67% of the companies in the same industry.
In the last couple of years the Operating Margin of CSCO has declined.
CSCO's Gross Margin of 65.24% is amongst the best of the industry. CSCO outperforms 89.58% 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.
Compared to 1 year ago, CSCO has less shares outstanding
The number of shares outstanding for CSCO has been reduced compared to 5 years ago.
Compared to 1 year ago, CSCO has a worse debt to assets ratio.
2.2 Solvency
An Altman-Z score of 2.96 indicates that CSCO is not a great score, but indicates only limited risk for bankruptcy at the moment.
The Altman-Z score of CSCO (2.96) is better than 70.83% 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.
CSCO has a better Debt to FCF ratio (2.29) than 66.67% of its industry peers.
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 70.83% of its industry peers.
Although CSCO does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.59 | ||
| Debt/FCF | 2.29 | ||
| Altman-Z | 2.96 |
ROIC/WACC1.26
WACC8.98%
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 has a Current ratio of 0.95. This is amonst the worse of the industry: CSCO underperforms 85.42% of its industry peers.
A Quick Ratio of 0.87 indicates that CSCO may have some problems paying its short term obligations.
Looking at the Quick ratio, with a value of 0.87, CSCO is doing worse than 72.92% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.95 | ||
| Quick Ratio | 0.87 |
3. Growth
3.1 Past
CSCO shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -8.00%.
Measured over the past 5 years, CSCO shows a small growth in Earnings Per Share. The EPS has been growing by 3.84% on average per year.
Looking at the last year, CSCO shows a small growth in Revenue. The Revenue has grown by 0.47% in the last 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
Based on estimates for the next years, CSCO will show a small growth in Earnings Per Share. The EPS will grow by 6.50% on average per year.
Based on estimates for the next years, CSCO will show a small growth in Revenue. The Revenue will grow by 4.73% on average per year.
EPS Next Y3.63%
EPS Next 2Y4.93%
EPS Next 3Y6.03%
EPS Next 5Y6.5%
Revenue Next Year5.45%
Revenue Next 2Y5.28%
Revenue Next 3Y5.12%
Revenue Next 5Y4.73%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 18.81, which indicates a rather expensive current valuation of CSCO.
Compared to the rest of the industry, the Price/Earnings ratio of CSCO indicates a somewhat cheap valuation: CSCO is cheaper than 70.83% of the companies listed in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 26.99, CSCO is valued a bit cheaper.
A Price/Forward Earnings ratio of 16.85 indicates a correct valuation of CSCO.
Based on the Price/Forward Earnings ratio, CSCO is valued a bit cheaper than the industry average as 66.67% of the companies are valued more expensively.
CSCO's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 36.36.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.81 | ||
| Fwd PE | 16.85 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, CSCO is valued a bit cheaper than 64.58% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of CSCO indicates a somewhat cheap valuation: CSCO is cheaper than 68.75% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 21.41 | ||
| EV/EBITDA | 17.8 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
CSCO has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)5.18
PEG (5Y)4.9
EPS Next 2Y4.93%
EPS Next 3Y6.03%
5. Dividend
5.1 Amount
CSCO has a Yearly Dividend Yield of 2.41%.
Compared to an average industry Dividend Yield of 3.72, CSCO pays a better dividend. On top of this CSCO pays more dividend than 85.42% of the companies listed in the same industry.
CSCO's Dividend Yield is comparable with the S&P500 average which is at 2.40.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.41% |
5.2 History
The dividend of CSCO has a limited annual growth rate of 3.23%.
CSCO has paid a dividend for at least 10 years, which is a reliable track record.
CSCO has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)3.23%
Div Incr Years13
Div Non Decr Years13
5.3 Sustainability
CSCO pays out 65.54% of its income as dividend. 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 2Y4.93%
EPS Next 3Y6.03%
69.21
+1.69 (+2.5%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryCommunications Equipment
Earnings (Last)
Earnings (Next)
Inst Owners81.14%
Inst Owner Change0.09%
Ins Owners0.03%
Ins Owner Change-3.1%
Market Cap274.07B
Analysts79.35
Price Target72.84 (5.24%)
Short Float %1.25%
Short Ratio2.47
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.41% |
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)0.96%
PT rev (3m)3.28%
EPS NQ rev (1m)0%
EPS NQ rev (3m)3.06%
EPS NY rev (1m)0%
EPS NY rev (3m)1.99%
Revenue NQ rev (1m)-0.01%
Revenue NQ rev (3m)0.68%
Revenue NY rev (1m)0.01%
Revenue NY rev (3m)0.45%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.81 | ||
| Fwd PE | 16.85 | ||
| P/S | 4.93 | ||
| P/FCF | 21.41 | ||
| P/OCF | 20.02 | ||
| P/B | 5.97 | ||
| P/tB | N/A | ||
| EV/EBITDA | 17.8 |
EPS(TTM)3.68
EY5.32%
EPS(NY)4.11
Fwd EY5.93%
FCF(TTM)3.23
FCFY4.67%
OCF(TTM)3.46
OCFY4.99%
SpS14.05
BVpS11.6
TBVpS-5.74
PEG (NY)5.18
PEG (5Y)4.9
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 | 2.96 |
F-Score7
WACC8.98%
ROIC/WACC1.26
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 2Y4.93%
EPS Next 3Y6.03%
EPS Next 5Y6.5%
Revenue 1Y (TTM)0.47%
Revenue growth 3Y2.6%
Revenue growth 5Y0.72%
Sales Q2Q%11.39%
Revenue Next Year5.45%
Revenue Next 2Y5.28%
Revenue Next 3Y5.12%
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%