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 49 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.
In the past 5 years CSCO has always been profitable.
CSCO had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
CSCO has a better Return On Assets (8.17%) than 85.71% of its industry peers.
CSCO has a better Return On Equity (21.32%) than 89.80% of its industry peers.
CSCO's Return On Invested Capital of 11.30% is amongst the best of the industry. CSCO outperforms 81.63% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for CSCO is in line with the industry average of 13.73%.
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
CSCO has a better Profit Margin (17.60%) than 91.84% of its industry peers.
CSCO's Profit Margin has declined in the last couple of years.
The Operating Margin of CSCO (21.81%) is better than 91.84% of its industry peers.
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 89.80% 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
CSCO has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
CSCO has less shares outstanding than it did 1 year ago.
Compared to 5 years ago, CSCO has less shares outstanding
The debt/assets ratio for CSCO is higher compared to a year ago.
2.2 Solvency
CSCO has an Altman-Z score of 2.85. This is not the best score and indicates that CSCO is in the grey zone with still only limited risk for bankruptcy at the moment.
CSCO has a better Altman-Z score (2.85) than 73.47% of its industry peers.
CSCO has a debt to FCF ratio of 2.29. This is a good value and a sign of high solvency as CSCO would need 2.29 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 2.29, CSCO is in the better half of the industry, outperforming 65.31% of the companies in the same industry.
A Debt/Equity ratio of 0.59 indicates that CSCO is somewhat dependend on debt financing.
CSCO has a Debt to Equity ratio of 0.59. This is in the lower half of the industry: CSCO underperforms 71.43% 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 | 2.85 |
ROIC/WACC1.19
WACC9.48%
2.3 Liquidity
A Current Ratio of 0.95 indicates that CSCO may have some problems paying its short term obligations.
With a Current ratio value of 0.95, CSCO is not doing good in the industry: 85.71% of the companies in the same industry are doing better.
A Quick Ratio of 0.87 indicates that CSCO may have some problems paying its short term obligations.
CSCO has a Quick ratio of 0.87. This is in the lower half of the industry: CSCO underperforms 77.55% of its industry peers.
| 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%.
CSCO shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 3.84% yearly.
CSCO shows a small growth in Revenue. In the last year, the Revenue has grown by 0.47%.
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.
CSCO is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.73% yearly.
EPS Next Y3.13%
EPS Next 2Y4.95%
EPS Next 3Y6.04%
EPS Next 5Y6.5%
Revenue Next Year5.44%
Revenue Next 2Y5.34%
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.
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
A Price/Earnings ratio of 17.69 indicates a rather expensive 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 71.43% of the companies listed in the same industry.
CSCO is valuated rather cheaply when we compare the Price/Earnings ratio to 26.60, which is the current average of the S&P500 Index.
A Price/Forward Earnings ratio of 15.84 indicates a correct valuation of CSCO.
Based on the Price/Forward Earnings ratio, CSCO is valued a bit cheaper than the industry average as 65.31% of the companies are valued more expensively.
CSCO is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 22.39, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.69 | ||
| Fwd PE | 15.84 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of CSCO indicates a somewhat cheap valuation: CSCO is cheaper than 65.31% of the companies listed in the same industry.
67.35% of the companies in the same industry are more expensive than CSCO, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 20.14 | ||
| EV/EBITDA | 16.93 |
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 excellent profitability rating of CSCO may justify a higher PE ratio.
PEG (NY)5.65
PEG (5Y)4.61
EPS Next 2Y4.95%
EPS Next 3Y6.04%
5. Dividend
5.1 Amount
CSCO has a Yearly Dividend Yield of 2.54%.
Compared to an average industry Dividend Yield of 3.60, CSCO pays a better dividend. On top of this CSCO pays more dividend than 85.71% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.39, CSCO has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.54% |
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
CSCO pays out 65.54% of its income as dividend. This is not a sustainable payout ratio.
The dividend of CSCO is growing, but earnings are growing more, so the dividend growth is sustainable.
DP65.54%
EPS Next 2Y4.95%
EPS Next 3Y6.04%
65.1
+0.91 (+1.42%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryCommunications Equipment
Earnings (Last)
Earnings (Next)
Inst Owners79.84%
Inst Owner Change1.93%
Ins Owners0.04%
Ins Owner Change-2.87%
Market Cap257.80B
Analysts78.67
Price Target71.47 (9.78%)
Short Float %1.45%
Short Ratio2.37
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.54% |
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)1.34%
PT rev (3m)1.19%
EPS NQ rev (1m)3.06%
EPS NQ rev (3m)3.03%
EPS NY rev (1m)1.49%
EPS NY rev (3m)1.42%
Revenue NQ rev (1m)0.72%
Revenue NQ rev (3m)0.67%
Revenue NY rev (1m)0.43%
Revenue NY rev (3m)0.4%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.69 | ||
| Fwd PE | 15.84 | ||
| P/S | 4.63 | ||
| P/FCF | 20.14 | ||
| P/OCF | 18.83 | ||
| P/B | 5.61 | ||
| P/tB | N/A | ||
| EV/EBITDA | 16.93 |
EPS(TTM)3.68
EY5.65%
EPS(NY)4.11
Fwd EY6.31%
FCF(TTM)3.23
FCFY4.97%
OCF(TTM)3.46
OCFY5.31%
SpS14.05
BVpS11.6
TBVpS-5.74
PEG (NY)5.65
PEG (5Y)4.61
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 | 2.85 |
F-Score7
WACC9.48%
ROIC/WACC1.19
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 5Y6.5%
Revenue 1Y (TTM)0.47%
Revenue growth 3Y2.6%
Revenue growth 5Y0.72%
Sales Q2Q%11.39%
Revenue Next Year5.44%
Revenue Next 2Y5.34%
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%