Cisco Systems (CSCO) Shares Fell Today. Our Editor Investigates Their Valuation.

Now trading at a price of $47.02, Cisco Systems has moved -2.2% so far today on a volume of 13,742,221, compared to its average of 18,563,295. In contrast, the S&P 500 index moved -1.5%. Let's dive into a brief fundamental analysis of the company.

Cisco Systems shares moved -18.4% over the last 52 weeks, with a high of $59.49 and a low of $38.6. During this time, the stock lagged the S&P 500 index by -6.4%. As of January 2022, the company's 50-day average price is $47.5398. Cisco Systems, Inc. designs, manufactures, and sells Internet Protocol based networking and other products related to the communications and information technology industry in the Americas, Europe, the Middle East, Africa, the Asia Pacific, Japan, and China. The large-cap Technology company has 83,300 full time employees and is based in San Jose, CA. Cisco Systems has returned a 3.1% dividend yield over the last 12 months.

The Company Has a Steady Stream of Positive Cash Flows with a Flat Trend:

2019-07-31 2020-07-31 2021-07-31 2022-07-31
Revenue (MM) $51,904 $49,301 $49,818 $51,557
Revenue Growth n/a -5.02% 1.05% 3.49%
Gross Margins 62.9% 64.3% 64.0% 62.6%
Gross Margins Growth n/a 2.23% -0.47% -2.19%
Operating Margins 28.0% 28.6% 27.5% 27.1%
Operating Margins Growth n/a 2.14% -3.85% -1.45%
Earnings Per Share $2.61 $2.64 $2.5 $2.82
EPS Growth n/a 1.15% -5.3% 12.8%
Free Cash Flow (MM) $14,922 $14,656 $14,762 $12,749
FCF Growth n/a -1.78% 0.72% -13.64%
Capital Expenditures (MM) -$909 -$770 -$692 -$477
Net Debt / EBITDA 0.73 0.17 0.15 0.15

Cisco Systems Is Fairly Priced at Current Levels:

Compared to the Technology sector's average of 26.5, Cisco Systems has a trailing twelve month P/E ratio of 17.0 and, according to its EPS guidance of 3.83, an expected P/E ratio of 12.3. Cisco Systems's PEG ratio is 1.51 based on its 11.25% annual average growth rate of historical and projected earnings per share. This suggests that the company's shares are overvalued.

However, Cisco Systems is likely undervalued in terms of its equity because its P/B ratio is 4.8 compared to its sector average of 5.57. The company's shares are currently trading 94.8% above their fair value as expressed by Benjamin Graham's formula:

√(22.5 * 4-year average EPS * book value per share) = √(22.5 * 2.64 * 9.815) = $24.15

Cisco Systems Is the Subject of Mixed Market Indicators:

22 analysts are following Cisco Systems and have set target prices ranging from $44 to $71 per share. On average, they have given the company a rating of buy. At the current price of $47.02, CSCO is trading -14.17% away from its average analyst target price of $54.79 per share, implying an analyst consensus of some upside potential for the stock.

The company has a very low short interest since 0.8% of the company's shares are tied to short positions. Institutions own 76.2% of Cisco Systems's shares, while the insider ownership rate stands at 0.08%. The biggest shareholder is the Vanguard Group, Inc. with a 9% stake in the company worth approximately $17,758,371,167.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.