CISCO SYSTEMS INC (CSCO) Stock Fundamental Analysis
USA - NASDAQ:CSCO - US17275R1023 - Common Stock
70.65 USD
+0.52 (+0.74%)
70.65 USD
0 (0%)
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 decent growth rate and is not valued too expensively.
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.
CSCO had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
CSCO's Return On Assets of 8.32% is fine compared to the rest of the industry. CSCO outperforms 79.17% of its industry peers.
The Return On Equity of CSCO (21.73%) is better than 87.50% of its industry peers.
CSCO has a Return On Invested Capital of 11.70%. This is amongst the best in the industry. CSCO outperforms 83.33% of its industry peers.
CSCO had an Average Return On Invested Capital over the past 3 years of 14.02%. This is in line with the industry average of 13.08%.
| 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 has a better Profit Margin (17.97%) than 91.67% of its industry peers.
CSCO's Profit Margin has declined in the last couple of years.
With an excellent Operating Margin value of 22.09%, CSCO belongs to the best 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.
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
With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), CSCO is creating some value.
Compared to 1 year ago, CSCO has less shares outstanding
Compared to 5 years ago, CSCO has less shares outstanding
Compared to 1 year ago, CSCO has an improved debt to assets ratio.
2.2 Solvency
An Altman-Z score of 3.01 indicates that CSCO is not in any danger for bankruptcy at the moment.
CSCO has a better Altman-Z score (3.01) than 62.50% 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.
Looking at the Debt to FCF ratio, with a value of 2.11, CSCO is in the better half of the industry, outperforming 60.42% of the companies in the same industry.
A Debt/Equity ratio of 0.56 indicates that CSCO is somewhat dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.56, CSCO is doing worse than 77.08% of the companies in the same industry.
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 | 0.56 | ||
| Debt/FCF | 2.11 | ||
| Altman-Z | 3.01 |
ROIC/WACC1.29
WACC9.1%
2.3 Liquidity
CSCO has a Current 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.
With a Current ratio value of 1.00, CSCO is not doing good in the industry: 89.58% of the companies in the same industry are doing better.
A Quick Ratio of 0.91 indicates that CSCO may have some problems paying its short term obligations.
CSCO has a Quick ratio of 0.91. This is in the lower half of the industry: CSCO underperforms 79.17% 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.
Measured over the past 5 years, CSCO shows a small growth in Earnings Per Share. The EPS has been growing by 3.50% on average per year.
CSCO shows a small growth in Revenue. In the last year, the Revenue has grown by 5.30%.
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.
Based on estimates for the next years, CSCO will show a small growth in Revenue. The Revenue will grow by 4.95% on average per year.
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
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
The Price/Earnings ratio is 18.59, which indicates a rather expensive current valuation of CSCO.
Based on the Price/Earnings ratio, CSCO is valued a bit cheaper than the industry average as 72.92% of the companies are valued more expensively.
CSCO's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 27.69.
The Price/Forward Earnings ratio is 17.13, which indicates a rather expensive current valuation of CSCO.
CSCO's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. CSCO is cheaper than 72.92% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 23.18, CSCO is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.59 | ||
| Fwd PE | 17.13 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, CSCO is valued a bit cheaper than 66.67% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, CSCO is valued a bit cheaper than 70.83% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 21.02 | ||
| EV/EBITDA | 18.14 |
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)2.18
PEG (5Y)5.32
EPS Next 2Y8.05%
EPS Next 3Y6.64%
5. Dividend
5.1 Amount
CSCO has a Yearly Dividend Yield of 2.37%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 3.55, 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 2.34.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.37% |
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%
70.65
+0.52 (+0.74%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryCommunications Equipment
Earnings (Last)
Earnings (Next)
Inst Owners80.81%
Inst Owner Change-0.48%
Ins Owners0.05%
Ins Owner Change3.56%
Market Cap279.29B
Analysts77.5
Price Target77.48 (9.67%)
Short Float %1.13%
Short Ratio2.28
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.37% |
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)1.17%
EPS NY rev (1m)0.02%
EPS NY rev (3m)0.42%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.88%
Revenue NY rev (1m)0.01%
Revenue NY rev (3m)0.16%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.59 | ||
| Fwd PE | 17.13 | ||
| P/S | 4.93 | ||
| P/FCF | 21.02 | ||
| P/OCF | 19.68 | ||
| P/B | 5.96 | ||
| P/tB | N/A | ||
| EV/EBITDA | 18.14 |
EPS(TTM)3.8
EY5.38%
EPS(NY)4.12
Fwd EY5.84%
FCF(TTM)3.36
FCFY4.76%
OCF(TTM)3.59
OCFY5.08%
SpS14.33
BVpS11.85
TBVpS-5.43
PEG (NY)2.18
PEG (5Y)5.32
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 | 3.01 |
F-Score8
WACC9.1%
ROIC/WACC1.29
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%