CISCO SYSTEMS INC (CSCO) Stock Fundamental Analysis
NASDAQ:CSCO - Nasdaq - US17275R1023 - Common Stock - Currency: USD
CSCO gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 50 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
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
Looking at the Return On Assets, with a value of 8.17%, CSCO belongs to the top of the industry, outperforming 86.00% of the companies in the same industry.
Looking at the Return On Equity, with a value of 21.32%, CSCO belongs to the top of the industry, outperforming 90.00% of the companies in the same industry.
CSCO's Return On Invested Capital of 11.30% is amongst the best of the industry. CSCO outperforms 82.00% 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 13.82%.
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
Looking at the Profit Margin, with a value of 17.60%, CSCO belongs to the top of the industry, outperforming 92.00% of the companies in the same industry.
In the last couple of years the Profit Margin of CSCO has declined.
Looking at the Operating Margin, with a value of 21.81%, CSCO belongs to the top 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.
CSCO has a Gross Margin of 65.24%. This is amongst the best in the industry. CSCO outperforms 90.00% 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
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 3.02. This indicates that CSCO is financially healthy and has little risk of bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 3.02, CSCO is in the better half of the industry, outperforming 70.00% of the companies in the same industry.
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.
CSCO has a Debt to FCF ratio of 2.29. This is in the better half of the industry: CSCO outperforms 68.00% of its industry peers.
CSCO has a Debt/Equity ratio of 0.59. This is a neutral value indicating CSCO is somewhat dependend on debt financing.
The Debt to Equity ratio of CSCO (0.59) is worse than 70.00% 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 | 0.59 | ||
| Debt/FCF | 2.29 | ||
| Altman-Z | 3.02 |
ROIC/WACC1.17
WACC9.68%
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 84.00% of its industry peers.
CSCO has a Quick 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.
With a Quick ratio value of 0.87, CSCO is not doing good in the industry: 76.00% 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.
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%.
The Revenue has been growing slightly by 0.72% on average over the past years.
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.
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 2Y4.92%
EPS Next 3Y5.99%
EPS Next 5Y6.5%
Revenue Next Year5.43%
Revenue Next 2Y5.33%
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
Based on the Price/Earnings ratio of 18.73, the valuation of CSCO can be described as rather expensive.
Based on the Price/Earnings ratio, CSCO is valued a bit cheaper than 74.00% of the companies in the same industry.
When comparing the Price/Earnings ratio of CSCO to the average of the S&P500 Index (27.29), we can say CSCO is valued slightly cheaper.
The Price/Forward Earnings ratio is 16.79, which indicates a correct valuation of CSCO.
Based on the Price/Forward Earnings ratio, CSCO is valued a bit cheaper than 68.00% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.74, CSCO is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.73 | ||
| Fwd PE | 16.79 |
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 66.00% of the companies listed in the same industry.
66.00% 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 | 21.32 | ||
| EV/EBITDA | 18.28 |
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)5.16
PEG (5Y)4.88
EPS Next 2Y4.92%
EPS Next 3Y5.99%
5. Dividend
5.1 Amount
CSCO has a Yearly Dividend Yield of 2.36%. Purely for dividend investing, there may be better candidates out there.
CSCO's Dividend Yield is rather good when compared to the industry average which is at 3.42. CSCO pays more dividend than 88.00% of the companies in the same industry.
CSCO's Dividend Yield is comparable with the S&P500 average which is at 2.37.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.36% |
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.
The dividend of CSCO is growing, but earnings are growing more, so the dividend growth is sustainable.
DP65.54%
EPS Next 2Y4.92%
EPS Next 3Y5.99%
68.93
-0.44 (-0.63%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryCommunications Equipment
Earnings (Last)
Earnings (Next)
Inst Owners81.14%
Inst Owner Change0.02%
Ins Owners0.03%
Ins Owner Change-3.07%
Market Cap272.96B
Analysts79.35
Price Target72.15 (4.67%)
Short Float %1.05%
Short Ratio1.99
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.36% |
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)3.36%
PT rev (3m)0.84%
EPS NQ rev (1m)0%
EPS NQ rev (3m)3.04%
EPS NY rev (1m)0.49%
EPS NY rev (3m)1.91%
Revenue NQ rev (1m)-0.03%
Revenue NQ rev (3m)0.63%
Revenue NY rev (1m)-0.01%
Revenue NY rev (3m)0.38%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.73 | ||
| Fwd PE | 16.79 | ||
| P/S | 4.91 | ||
| P/FCF | 21.32 | ||
| P/OCF | 19.94 | ||
| P/B | 5.94 | ||
| P/tB | N/A | ||
| EV/EBITDA | 18.28 |
EPS(TTM)3.68
EY5.34%
EPS(NY)4.11
Fwd EY5.96%
FCF(TTM)3.23
FCFY4.69%
OCF(TTM)3.46
OCFY5.01%
SpS14.05
BVpS11.6
TBVpS-5.74
PEG (NY)5.16
PEG (5Y)4.88
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 | 3.02 |
F-Score7
WACC9.68%
ROIC/WACC1.17
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 2Y4.92%
EPS Next 3Y5.99%
EPS Next 5Y6.5%
Revenue 1Y (TTM)0.47%
Revenue growth 3Y2.6%
Revenue growth 5Y0.72%
Sales Q2Q%11.39%
Revenue Next Year5.43%
Revenue Next 2Y5.33%
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%