CISCO SYSTEMS INC (CSCO) Stock Fundamental Analysis
NASDAQ:CSCO - Nasdaq - US17275R1023 - Common Stock - Currency: USD
We assign a fundamental rating of 5 out of 10 to CSCO. CSCO was compared to 49 industry peers in the Communications Equipment industry. CSCO scores excellent on profitability, but there are concerns on its financial health. CSCO is not valued too expensively and it also shows a decent growth rate.
1. Profitability
1.1 Basic Checks
CSCO had positive earnings in the past year.
CSCO had a positive operating cash flow in the past year.
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
CSCO has a better Return On Assets (8.17%) than 85.71% of its industry peers.
Looking at the Return On Equity, with a value of 21.32%, CSCO belongs to the top of the industry, outperforming 89.80% of the companies in the same industry.
CSCO has a better Return On Invested Capital (11.87%) than 81.63% 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 13.73%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.17% | ||
| ROE | 21.32% | ||
| ROIC | 11.87% |
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 91.84% of the companies in the same industry.
In the last couple of years the Profit Margin of CSCO has declined.
CSCO has a Operating Margin of 21.84%. This is amongst the best in the industry. CSCO outperforms 91.84% of its industry peers.
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 87.76% of its industry peers.
CSCO's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 21.84% | ||
| 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.
CSCO has less shares outstanding than it did 1 year ago.
Compared to 5 years ago, CSCO has less shares outstanding
CSCO has a worse debt/assets ratio than last year.
2.2 Solvency
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.
The Debt to FCF ratio of CSCO (2.29) is better than 63.27% of its industry peers.
CSCO has a Debt/Equity ratio of 0.50. This is a healthy value indicating a solid balance between debt and equity.
CSCO has a Debt to Equity ratio of 0.50. This is in the lower half of the industry: CSCO underperforms 65.31% 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 | 0.5 | ||
| Debt/FCF | 2.29 | ||
| Altman-Z | N/A |
ROIC/WACC1.21
WACC9.8%
2.3 Liquidity
A Current Ratio of 0.95 indicates that CSCO may have some problems paying 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 85.71% of its industry peers.
A Quick Ratio of 0.87 indicates that CSCO may have some problems paying its short term obligations.
With a Quick ratio value of 0.87, CSCO is not doing good in the industry: 79.59% of the companies in the same industry are doing better.
| 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.
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.
The Revenue has been growing slightly by 0.47% in the past year.
CSCO shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 0.72% yearly.
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
CSCO is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 5.85% yearly.
The Revenue is expected to grow by 4.39% on average over the next years.
EPS Next Y3.13%
EPS Next 2Y4.95%
EPS Next 3Y6.04%
EPS Next 5Y5.85%
Revenue Next Year5.4%
Revenue Next 2Y5.28%
Revenue Next 3Y5.05%
Revenue Next 5Y4.39%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
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
Based on the Price/Earnings ratio of 17.22, the valuation of CSCO can be described as rather expensive.
Based on the Price/Earnings ratio, CSCO is valued a bit cheaper than 71.43% of the companies in the same industry.
CSCO is valuated rather cheaply when we compare the Price/Earnings ratio to 25.91, which is the current average of the S&P500 Index.
CSCO is valuated correctly with a Price/Forward Earnings ratio of 15.42.
Compared to the rest of the industry, the Price/Forward Earnings ratio of CSCO indicates a somewhat cheap valuation: CSCO is cheaper than 69.39% of the companies listed in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.85, CSCO is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.22 | ||
| Fwd PE | 15.42 |
4.2 Price Multiples
67.35% of the companies in the same industry are more expensive than CSCO, based on the Enterprise Value to EBITDA ratio.
Based on the Price/Free Cash Flow ratio, CSCO is valued a bit cheaper than 65.31% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 19.69 | ||
| EV/EBITDA | 17.01 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The decent profitability rating of CSCO may justify a higher PE ratio.
PEG (NY)5.5
PEG (5Y)4.49
EPS Next 2Y4.95%
EPS Next 3Y6.04%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.59%, CSCO has a reasonable but not impressive dividend return.
CSCO's Dividend Yield is rather good when compared to the industry average which is at 3.59. CSCO pays more dividend than 85.71% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.36, CSCO has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.59% |
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 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
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 2Y4.95%
EPS Next 3Y6.04%
63.36
+0.16 (+0.25%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryCommunications Equipment
Earnings (Last)
Earnings (Next)
Inst Owners79.84%
Inst Owner Change1.68%
Ins Owners0.04%
Ins Owner Change-2.44%
Market Cap252.06B
Analysts75.33
Price Target69.81 (10.18%)
Short Float %1.21%
Short Ratio2.04
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.59% |
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)-2.43%
PT rev (3m)9.07%
EPS NQ rev (1m)0.95%
EPS NQ rev (3m)1.04%
EPS NY rev (1m)1.49%
EPS NY rev (3m)1.83%
Revenue NQ rev (1m)0.49%
Revenue NQ rev (3m)0.66%
Revenue NY rev (1m)0.41%
Revenue NY rev (3m)1.13%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.22 | ||
| Fwd PE | 15.42 | ||
| P/S | 4.53 | ||
| P/FCF | 19.69 | ||
| P/OCF | 18.41 | ||
| P/B | 5.49 | ||
| P/tB | N/A | ||
| EV/EBITDA | 17.01 |
EPS(TTM)3.68
EY5.81%
EPS(NY)4.11
Fwd EY6.48%
FCF(TTM)3.22
FCFY5.08%
OCF(TTM)3.44
OCFY5.43%
SpS13.98
BVpS11.55
TBVpS-5.71
PEG (NY)5.5
PEG (5Y)4.49
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.17% | ||
| ROE | 21.32% | ||
| ROCE | 14.24% | ||
| ROIC | 11.87% | ||
| ROICexc | 14.54% | ||
| ROICexgc | 1035.29% | ||
| OM | 21.84% | ||
| 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 | 0.5 | ||
| Debt/FCF | 2.29 | ||
| Debt/EBITDA | 1.51 | ||
| Cap/Depr | 29.54% | ||
| Cap/Sales | 1.59% | ||
| Interest Coverage | 7.58 | ||
| Cash Conversion | 90.37% | ||
| Profit Quality | 130.75% | ||
| Current Ratio | 0.95 | ||
| Quick Ratio | 0.87 | ||
| Altman-Z | N/A |
F-Score7
WACC9.8%
ROIC/WACC1.21
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 Y3.13%
EPS Next 2Y4.95%
EPS Next 3Y6.04%
EPS Next 5Y5.85%
Revenue 1Y (TTM)0.47%
Revenue growth 3Y2.6%
Revenue growth 5Y0.72%
Sales Q2Q%11.39%
Revenue Next Year5.4%
Revenue Next 2Y5.28%
Revenue Next 3Y5.05%
Revenue Next 5Y4.39%
EBIT growth 1Y-17.45%
EBIT growth 3Y-1.84%
EBIT growth 5Y-2.17%
EBIT Next Year17.02%
EBIT Next 3Y8.09%
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%