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 51 industry peers in the Communications Equipment industry. CSCO scores excellent on profitability, but there are concerns on its financial health. CSCO has a valuation in line with the averages, but it does not seem to be growing.
1. Profitability
1.1 Basic Checks
In the past year CSCO was profitable.
CSCO had a positive operating cash flow in the past year.
In the past 5 years CSCO has always been profitable.
Each year in the past 5 years CSCO had a positive operating cash flow.
1.2 Ratios
CSCO has a Return On Assets of 7.57%. This is amongst the best in the industry. CSCO outperforms 88.00% of its industry peers.
CSCO's Return On Equity of 20.18% is amongst the best of the industry. CSCO outperforms 92.00% of its industry peers.
CSCO has a better Return On Invested Capital (11.93%) than 86.00% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for CSCO is above the industry average of 11.66%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.57% | ||
| ROE | 20.18% | ||
| ROIC | 11.93% |
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 16.96% is amongst the best of the industry. CSCO outperforms 94.00% of its industry peers.
In the last couple of years the Profit Margin of CSCO has declined.
With an excellent Operating Margin value of 21.49%, CSCO belongs to the best of the industry, outperforming 92.00% of the companies in the same industry.
In the last couple of years the Operating Margin of CSCO has declined.
The Gross Margin of CSCO (65.13%) is better than 90.00% of its industry peers.
In the last couple of years the Gross Margin of CSCO has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 21.49% | ||
| PM (TTM) | 16.96% | ||
| GM | 65.13% |
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
With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), CSCO is creating some value.
CSCO has less shares outstanding than it did 1 year ago.
The number of shares outstanding for CSCO has been reduced compared to 5 years ago.
The debt/assets ratio for CSCO is higher compared to a year ago.
2.2 Solvency
The Debt to FCF ratio of CSCO is 2.42, which is a good value as it means it would take CSCO, 2.42 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 2.42, CSCO is in line with its industry, outperforming 60.00% of the companies in the same industry.
A Debt/Equity ratio of 0.43 indicates that CSCO is not too dependend on debt financing.
With a Debt to Equity ratio value of 0.43, CSCO is not doing good in the industry: 66.00% of the companies in the same industry are doing better.
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 | 0.43 | ||
| Debt/FCF | 2.42 | ||
| Altman-Z | N/A |
ROIC/WACC1.3
WACC9.21%
2.3 Liquidity
A Current Ratio of 0.87 indicates that CSCO may have some problems paying its short term obligations.
CSCO has a Current ratio of 0.87. This is amonst the worse of the industry: CSCO underperforms 90.00% of its industry peers.
CSCO has a Quick Ratio of 0.87. 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 Quick ratio of 0.79 is on the low side compared to the rest of the industry. CSCO is outperformed by 84.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.87 | ||
| Quick Ratio | 0.79 |
3. Growth
3.1 Past
The earnings per share for CSCO have decreased strongly by -12.62% in the last year.
CSCO shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 3.84% yearly.
Looking at the last year, CSCO shows a decrease in Revenue. The Revenue has decreased by -5.34% 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)-12.62%
EPS 3Y5.02%
EPS 5Y3.84%
EPS Q2Q%8.05%
Revenue 1Y (TTM)-5.34%
Revenue growth 3Y2.6%
Revenue growth 5Y0.72%
Sales Q2Q%9.38%
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 4.42% on average per year.
Based on estimates for the next years, CSCO will show a small growth in Revenue. The Revenue will grow by 4.03% on average per year.
EPS Next Y1.69%
EPS Next 2Y4.73%
EPS Next 3Y5.94%
EPS Next 5Y4.42%
Revenue Next Year5.02%
Revenue Next 2Y5.09%
Revenue Next 3Y4.96%
Revenue Next 5Y4.03%
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 stable.
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 17.77.
78.00% of the companies in the same industry are more expensive than CSCO, based on the Price/Earnings ratio.
When comparing the Price/Earnings ratio of CSCO to the average of the S&P500 Index (29.63), we can say CSCO is valued slightly cheaper.
With a Price/Forward Earnings ratio of 15.64, CSCO is valued correctly.
Based on the Price/Forward Earnings ratio, CSCO is valued a bit cheaper than the industry average as 76.00% of the companies are valued more expensively.
When comparing the Price/Forward Earnings ratio of CSCO to the average of the S&P500 Index (22.68), we can say CSCO is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.77 | ||
| Fwd PE | 15.64 |
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 68.00% of the companies listed in the same industry.
78.00% 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 | 19.89 | ||
| EV/EBITDA | 17.71 |
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)10.53
PEG (5Y)4.63
EPS Next 2Y4.73%
EPS Next 3Y5.94%
5. Dividend
5.1 Amount
CSCO has a Yearly Dividend Yield of 2.53%.
Compared to an average industry Dividend Yield of 11.69, CSCO pays a better dividend. On top of this CSCO pays more dividend than 86.00% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.29, CSCO has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.53% |
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 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
CSCO pays out 69.73% 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.
DP69.73%
EPS Next 2Y4.73%
EPS Next 3Y5.94%
63.98
-0.69 (-1.07%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryCommunications Equipment
Earnings (Last)
Earnings (Next)
Inst Owners79.53%
Inst Owner Change0.78%
Ins Owners0.05%
Ins Owner Change4.9%
Market Cap254.82B
Analysts74.19
Price Target70.63 (10.39%)
Short Float %1.43%
Short Ratio2.84
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.53% |
Yearly Dividend1.58
Dividend Growth(5Y)3.23%
DP69.73%
Div Incr Years13
Div Non Decr Years13
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)1.92%
Min EPS beat(2)1.37%
Max EPS beat(2)2.47%
EPS beat(4)4
Avg EPS beat(4)2.27%
Min EPS beat(4)0.58%
Max EPS beat(4)4.64%
EPS beat(8)8
Avg EPS beat(8)2.87%
EPS beat(12)10
Avg EPS beat(12)1.93%
EPS beat(16)11
Avg EPS beat(16)1.51%
Revenue beat(2)0
Avg Revenue beat(2)-1.3%
Min Revenue beat(2)-1.46%
Max Revenue beat(2)-1.14%
Revenue beat(4)0
Avg Revenue beat(4)-1.11%
Min Revenue beat(4)-1.46%
Max Revenue beat(4)-0.63%
Revenue beat(8)0
Avg Revenue beat(8)-1.13%
Revenue beat(12)2
Avg Revenue beat(12)-1.18%
Revenue beat(16)2
Avg Revenue beat(16)-1.21%
PT rev (1m)0.97%
PT rev (3m)10.39%
EPS NQ rev (1m)1.65%
EPS NQ rev (3m)-3.27%
EPS NY rev (1m)1.4%
EPS NY rev (3m)3.32%
Revenue NQ rev (1m)1.05%
Revenue NQ rev (3m)4.69%
Revenue NY rev (1m)0.02%
Revenue NY rev (3m)0.14%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.77 | ||
| Fwd PE | 15.64 | ||
| P/S | 4.7 | ||
| P/FCF | 19.89 | ||
| P/OCF | 18.73 | ||
| P/B | 5.6 | ||
| P/tB | N/A | ||
| EV/EBITDA | 17.71 |
EPS(TTM)3.6
EY5.63%
EPS(NY)4.09
Fwd EY6.39%
FCF(TTM)3.22
FCFY5.03%
OCF(TTM)3.42
OCFY5.34%
SpS13.6
BVpS11.43
TBVpS-5.86
PEG (NY)10.53
PEG (5Y)4.63
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.57% | ||
| ROE | 20.18% | ||
| ROCE | 14.31% | ||
| ROIC | 11.93% | ||
| ROICexc | 15.04% | ||
| ROICexgc | N/A | ||
| OM | 21.49% | ||
| PM (TTM) | 16.96% | ||
| GM | 65.13% | ||
| FCFM | 23.65% |
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-Score5
Asset Turnover0.45
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.43 | ||
| Debt/FCF | 2.42 | ||
| Debt/EBITDA | 1.32 | ||
| Cap/Depr | 24.52% | ||
| Cap/Sales | 1.46% | ||
| Interest Coverage | 10.13 | ||
| Cash Conversion | 91.44% | ||
| Profit Quality | 139.44% | ||
| Current Ratio | 0.87 | ||
| Quick Ratio | 0.79 | ||
| Altman-Z | N/A |
F-Score5
WACC9.21%
ROIC/WACC1.3
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)-12.62%
EPS 3Y5.02%
EPS 5Y3.84%
EPS Q2Q%8.05%
EPS Next Y1.69%
EPS Next 2Y4.73%
EPS Next 3Y5.94%
EPS Next 5Y4.42%
Revenue 1Y (TTM)-5.34%
Revenue growth 3Y2.6%
Revenue growth 5Y0.72%
Sales Q2Q%9.38%
Revenue Next Year5.02%
Revenue Next 2Y5.09%
Revenue Next 3Y4.96%
Revenue Next 5Y4.03%
EBIT growth 1Y-27.32%
EBIT growth 3Y-1.84%
EBIT growth 5Y-2.17%
EBIT Next Year15.52%
EBIT Next 3Y6.99%
EBIT Next 5YN/A
FCF growth 1Y-17.08%
FCF growth 3Y-11.56%
FCF growth 5Y-7.31%
OCF growth 1Y-15.19%
OCF growth 3Y-11.04%
OCF growth 5Y-7.23%