CISCO SYSTEMS INC (CSCO) Stock Fundamental Analysis
USA - NASDAQ:CSCO - US17275R1023 - Common Stock
68.985 USD
+0.08 (+0.11%)
68.96 USD
-0.03 (-0.04%)
CSCO gets a fundamental rating of 6 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 correct valuation and a medium growth rate.
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.
CSCO had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
The Return On Assets of CSCO (8.32%) is better than 81.25% of its industry peers.
CSCO's Return On Equity of 21.73% is amongst the best of the industry. CSCO outperforms 89.58% of its industry peers.
Looking at the Return On Invested Capital, with a value of 11.70%, CSCO belongs to the top of the industry, outperforming 83.33% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for CSCO is in line with the industry average of 12.89%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.32% | ||
| ROE | 21.73% | ||
| ROIC | 11.7% |
ROA(3y)9.67%
ROA(5y)10.49%
ROE(3y)24.29%
ROE(5y)25.65%
ROIC(3y)14.02%
ROIC(5y)15.13%
1.3 Margins
CSCO's Profit Margin of 17.97% 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.
The Operating Margin of CSCO (22.09%) is better than 91.67% of its industry peers.
In the last couple of years the Operating Margin of CSCO has declined.
With an excellent Gross Margin value of 64.94%, CSCO belongs to the best of the industry, outperforming 89.58% of the companies in the same industry.
CSCO's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 22.09% | ||
| PM (TTM) | 17.97% | ||
| GM | 64.94% |
OM growth 3Y-6.7%
OM growth 5Y-5.03%
PM growth 3Y-7.78%
PM growth 5Y-4.61%
GM growth 3Y1.26%
GM growth 5Y0.21%
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 has been reduced compared to a year ago.
2.2 Solvency
An Altman-Z score of 2.97 indicates that CSCO is not a great score, but indicates only limited risk for bankruptcy at the moment.
CSCO's Altman-Z score of 2.97 is fine compared to the rest of the industry. CSCO outperforms 64.58% of its industry peers.
CSCO has a debt to FCF ratio of 2.11. This is a good value and a sign of high solvency as CSCO would need 2.11 years to pay back of all of its debts.
CSCO has a better Debt to FCF ratio (2.11) than 60.42% of its industry peers.
CSCO has a Debt/Equity ratio of 0.56. This is a neutral value indicating CSCO is somewhat dependend on debt financing.
The Debt to Equity ratio of CSCO (0.56) is worse than 77.08% 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 | 0.56 | ||
| Debt/FCF | 2.11 | ||
| Altman-Z | 2.97 |
ROIC/WACC1.22
WACC9.6%
2.3 Liquidity
A Current Ratio of 1.00 indicates that CSCO may have some problems paying its short term obligations.
CSCO's Current ratio of 1.00 is on the low side compared to the rest of the industry. CSCO is outperformed by 89.58% of its industry peers.
CSCO has a Quick Ratio of 1.00. 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 Quick ratio of 0.91. This is in the lower half of the industry: CSCO underperforms 77.08% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1 | ||
| Quick Ratio | 0.91 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 1.88% over the past year.
CSCO shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 3.50% yearly.
Looking at the last year, CSCO shows a small growth in Revenue. The Revenue has grown by 5.30% in the last year.
Measured over the past years, CSCO shows a small growth in Revenue. The Revenue has been growing by 2.82% on average per year.
EPS 1Y (TTM)1.88%
EPS 3Y4.19%
EPS 5Y3.5%
EPS Q2Q%13.79%
Revenue 1Y (TTM)5.3%
Revenue growth 3Y3.19%
Revenue growth 5Y2.82%
Sales Q2Q%7.56%
3.2 Future
CSCO is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 8.38% yearly.
The Revenue is expected to grow by 4.95% on average over the next years.
EPS Next Y8.52%
EPS Next 2Y8.05%
EPS Next 3Y6.64%
EPS Next 5Y8.38%
Revenue Next Year5.34%
Revenue Next 2Y4.96%
Revenue Next 3Y4.92%
Revenue Next 5Y4.95%
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
A Price/Earnings ratio of 18.15 indicates a rather expensive valuation of CSCO.
CSCO's Price/Earnings ratio is a bit cheaper when compared to the industry. CSCO is cheaper than 75.00% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 27.76. CSCO is valued slightly cheaper when compared to this.
Based on the Price/Forward Earnings ratio of 16.73, the valuation of CSCO can be described as correct.
CSCO's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. CSCO is cheaper than 77.08% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 23.21. CSCO is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.15 | ||
| Fwd PE | 16.73 |
4.2 Price Multiples
CSCO's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. CSCO is cheaper than 68.75% 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 70.83% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 20.52 | ||
| EV/EBITDA | 17.82 |
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.
The decent profitability rating of CSCO may justify a higher PE ratio.
PEG (NY)2.13
PEG (5Y)5.19
EPS Next 2Y8.05%
EPS Next 3Y6.64%
5. Dividend
5.1 Amount
CSCO has a Yearly Dividend Yield of 2.40%.
Compared to an average industry Dividend Yield of 3.66, 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 2.44.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.4% |
5.2 History
The dividend of CSCO has a limited annual growth rate of 2.65%.
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)2.65%
Div Incr Years13
Div Non Decr Years13
5.3 Sustainability
63.23% 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.
DP63.23%
EPS Next 2Y8.05%
EPS Next 3Y6.64%
68.985
+0.08 (+0.11%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryCommunications Equipment
Earnings (Last)
Earnings (Next)
Inst Owners80.81%
Inst Owner Change-0.01%
Ins Owners0.05%
Ins Owner Change3.58%
Market Cap272.71B
Analysts77.5
Price Target77.48 (12.31%)
Short Float %1.13%
Short Ratio2.28
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.4% |
Yearly Dividend1.62
Dividend Growth(5Y)2.65%
DP63.23%
Div Incr Years13
Div Non Decr Years13
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)1.01%
Min EPS beat(2)-0.5%
Max EPS beat(2)2.52%
EPS beat(4)3
Avg EPS beat(4)1.46%
Min EPS beat(4)-0.5%
Max EPS beat(4)2.52%
EPS beat(8)7
Avg EPS beat(8)2.32%
EPS beat(12)11
Avg EPS beat(12)2.22%
EPS beat(16)12
Avg EPS beat(16)1.69%
Revenue beat(2)0
Avg Revenue beat(2)-1.53%
Min Revenue beat(2)-1.58%
Max Revenue beat(2)-1.48%
Revenue beat(4)0
Avg Revenue beat(4)-1.41%
Min Revenue beat(4)-1.58%
Max Revenue beat(4)-1.14%
Revenue beat(8)0
Avg Revenue beat(8)-1.3%
Revenue beat(12)1
Avg Revenue beat(12)-1.04%
Revenue beat(16)2
Avg Revenue beat(16)-1.32%
PT rev (1m)0%
PT rev (3m)7.39%
EPS NQ rev (1m)0%
EPS NQ rev (3m)1.37%
EPS NY rev (1m)0.02%
EPS NY rev (3m)0.44%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)1.06%
Revenue NY rev (1m)0.01%
Revenue NY rev (3m)0.13%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.15 | ||
| Fwd PE | 16.73 | ||
| P/S | 4.81 | ||
| P/FCF | 20.52 | ||
| P/OCF | 19.21 | ||
| P/B | 5.82 | ||
| P/tB | N/A | ||
| EV/EBITDA | 17.82 |
EPS(TTM)3.8
EY5.51%
EPS(NY)4.12
Fwd EY5.98%
FCF(TTM)3.36
FCFY4.87%
OCF(TTM)3.59
OCFY5.2%
SpS14.33
BVpS11.85
TBVpS-5.43
PEG (NY)2.13
PEG (5Y)5.19
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.32% | ||
| ROE | 21.73% | ||
| ROCE | 14.35% | ||
| ROIC | 11.7% | ||
| ROICexc | 14.23% | ||
| ROICexgc | 168.77% | ||
| OM | 22.09% | ||
| PM (TTM) | 17.97% | ||
| GM | 64.94% | ||
| FCFM | 23.45% |
ROA(3y)9.67%
ROA(5y)10.49%
ROE(3y)24.29%
ROE(5y)25.65%
ROIC(3y)14.02%
ROIC(5y)15.13%
ROICexc(3y)19.45%
ROICexc(5y)21.44%
ROICexgc(3y)218.06%
ROICexgc(5y)205%
ROCE(3y)17.32%
ROCE(5y)18.35%
ROICexcg growth 3Y7.78%
ROICexcg growth 5Y-7.79%
ROICexc growth 3Y-15.92%
ROICexc growth 5Y-13.75%
OM growth 3Y-6.7%
OM growth 5Y-5.03%
PM growth 3Y-7.78%
PM growth 5Y-4.61%
GM growth 3Y1.26%
GM growth 5Y0.21%
F-Score8
Asset Turnover0.46
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.56 | ||
| Debt/FCF | 2.11 | ||
| Debt/EBITDA | 1.72 | ||
| Cap/Depr | 32.2% | ||
| Cap/Sales | 1.6% | ||
| Interest Coverage | 8.34 | ||
| Cash Conversion | 92.6% | ||
| Profit Quality | 130.53% | ||
| Current Ratio | 1 | ||
| Quick Ratio | 0.91 | ||
| Altman-Z | 2.97 |
F-Score8
WACC9.6%
ROIC/WACC1.22
Cap/Depr(3y)36.04%
Cap/Depr(5y)33.93%
Cap/Sales(3y)1.44%
Cap/Sales(5y)1.33%
Profit Quality(3y)126.8%
Profit Quality(5y)125.54%
High Growth Momentum
Growth
EPS 1Y (TTM)1.88%
EPS 3Y4.19%
EPS 5Y3.5%
EPS Q2Q%13.79%
EPS Next Y8.52%
EPS Next 2Y8.05%
EPS Next 3Y6.64%
EPS Next 5Y8.38%
Revenue 1Y (TTM)5.3%
Revenue growth 3Y3.19%
Revenue growth 5Y2.82%
Sales Q2Q%7.56%
Revenue Next Year5.34%
Revenue Next 2Y4.96%
Revenue Next 3Y4.92%
Revenue Next 5Y4.95%
EBIT growth 1Y-3.69%
EBIT growth 3Y-3.72%
EBIT growth 5Y-2.35%
EBIT Next Year15.46%
EBIT Next 3Y7.42%
EBIT Next 5YN/A
FCF growth 1Y30.15%
FCF growth 3Y1.39%
FCF growth 5Y-1.94%
OCF growth 1Y30.45%
OCF growth 3Y2.38%
OCF growth 5Y-1.65%