CISCO SYSTEMS INC (CSCO) Stock Fundamental Analysis
NASDAQ:CSCO - Nasdaq - US17275R1023 - Common Stock - Currency: USD
Overall CSCO gets a fundamental rating of 5 out of 10. We evaluated CSCO against 48 industry peers in the Communications Equipment industry. CSCO scores excellent on profitability, but there are some minor 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
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.
In the past 5 years CSCO always reported a positive cash flow from operatings.
1.2 Ratios
CSCO has a better Return On Assets (8.17%) than 85.42% 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 89.58% of the companies in the same industry.
Looking at the Return On Invested Capital, with a value of 11.30%, CSCO belongs to the top of the industry, outperforming 81.25% 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 14.30%.
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
The Profit Margin of CSCO (17.60%) is better than 91.67% of its industry peers.
CSCO's Profit Margin has declined in the last couple of years.
Looking at the Operating Margin, with a value of 21.81%, CSCO belongs to the top of the industry, outperforming 91.67% of the companies in the same industry.
CSCO's Operating Margin has declined in the last couple of years.
CSCO has a better Gross Margin (65.24%) than 89.58% 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 | 21.81% | ||
| 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
With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), CSCO is 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.
CSCO has a worse debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 2.98 indicates that CSCO is not a great score, but indicates only limited risk for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 2.98, CSCO is in the better half of the industry, outperforming 70.83% 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 better Debt to FCF ratio (2.29) than 66.67% 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.
CSCO has a worse Debt to Equity ratio (0.59) than 70.83% 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 | 2.98 |
ROIC/WACC1.14
WACC9.89%
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: 85.42% of the companies in the same industry are doing better.
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.
Looking at the Quick ratio, with a value of 0.87, CSCO is doing worse than 72.92% of the companies in the same industry.
| 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.
Looking at the last year, CSCO shows a small growth in Revenue. The Revenue has grown by 0.47% 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)-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
Based on estimates for the next years, CSCO will show a small growth in Earnings Per Share. The EPS will grow by 6.50% on average per year.
The Revenue is expected to grow by 4.73% on average over the next years.
EPS Next Y3.63%
EPS Next 2Y4.93%
EPS Next 3Y6.03%
EPS Next 5Y6.5%
Revenue Next Year5.43%
Revenue Next 2Y5.31%
Revenue Next 3Y5.12%
Revenue Next 5Y4.73%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
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
The Price/Earnings ratio is 18.49, which indicates a rather expensive current valuation of CSCO.
CSCO's Price/Earnings 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 an average S&P500 Price/Earnings ratio of 27.50, CSCO is valued a bit cheaper.
With a Price/Forward Earnings ratio of 16.57, CSCO is valued correctly.
Based on the Price/Forward Earnings ratio, CSCO is valued a bit cheaper than 64.58% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 36.44. CSCO is valued rather cheaply when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.49 | ||
| Fwd PE | 16.57 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, CSCO is valued a bit cheaper than 64.58% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, CSCO is valued a bit cheaper than the industry average as 70.83% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 21.05 | ||
| EV/EBITDA | 18 |
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)5.09
PEG (5Y)4.82
EPS Next 2Y4.93%
EPS Next 3Y6.03%
5. Dividend
5.1 Amount
CSCO has a Yearly Dividend Yield of 2.39%.
CSCO's Dividend Yield is rather good when compared to the industry average which is at 3.56. CSCO pays more dividend than 87.50% of the companies in the same industry.
CSCO's Dividend Yield is comparable with the S&P500 average which is at 2.35.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.39% |
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 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
65.54% of the earnings are spent on dividend by CSCO. 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 2Y4.93%
EPS Next 3Y6.03%
68.05
-0.25 (-0.37%)
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 Cap269.48B
Analysts79.35
Price Target72.15 (6.02%)
Short Float %1.27%
Short Ratio2.43
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.39% |
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)0.95%
PT rev (3m)0.84%
EPS NQ rev (1m)0%
EPS NQ rev (3m)3.06%
EPS NY rev (1m)0.48%
EPS NY rev (3m)1.91%
Revenue NQ rev (1m)-0.05%
Revenue NQ rev (3m)0.68%
Revenue NY rev (1m)-0.01%
Revenue NY rev (3m)0.43%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.49 | ||
| Fwd PE | 16.57 | ||
| P/S | 4.84 | ||
| P/FCF | 21.05 | ||
| P/OCF | 19.69 | ||
| P/B | 5.87 | ||
| P/tB | N/A | ||
| EV/EBITDA | 18 |
EPS(TTM)3.68
EY5.41%
EPS(NY)4.11
Fwd EY6.03%
FCF(TTM)3.23
FCFY4.75%
OCF(TTM)3.46
OCFY5.08%
SpS14.05
BVpS11.6
TBVpS-5.74
PEG (NY)5.09
PEG (5Y)4.82
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 | 2.98 |
F-Score7
WACC9.89%
ROIC/WACC1.14
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 2Y4.93%
EPS Next 3Y6.03%
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 2Y5.31%
Revenue Next 3Y5.12%
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%