Now trading at a price of $52.58, Cisco Systems has moved -0.2% so far today.
Cisco Systems returned gains of 17.0% last year, with its stock price reaching a high of $53.89 and a low of $38.6. Over the same period, the stock outperformed the S&P 500 index by 7.0%. More recently, the company's 50-day average price was $50.97. 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. Based in San Jose, CA, the large-cap Telecommunications company has 83,300 full time employees. Cisco Systems has offered a 2.9% dividend yield over the last 12 months.
EPS Trend Sustained Primarily by Reducing the Number of Shares Outstanding:
| 2019-09-05 | 2020-09-03 | 2021-09-09 | 2022-09-08 | |
|---|---|---|---|---|
| Revenue (MM) | $51,904 | $49,301 | $49,818 | $51,557 |
| Gross Margins | 62.9% | 64.3% | 64.0% | 62.6% |
| Operating Margins | 27.4% | 27.6% | 25.8% | 27.1% |
| Net Margins | 22.39% | 22.75% | 21.26% | 22.91% |
| Net Income (MM) | $11,621 | $11,214 | $10,591 | $11,812 |
| Net Interest Expense (MM) | $449 | $335 | $184 | $116 |
| Depreciation & Amort. (MM) | -$1,897 | -$1,808 | -$1,862 | -$1,957 |
| Earnings Per Share | $2.61 | $2.64 | $2.5 | $2.79 |
| EPS Growth | n/a | 1.15% | -5.3% | 11.6% |
| Diluted Shares (MM) | 4,453 | 4,254 | 4,236 | 4,075 |
| Free Cash Flow (MM) | $16,718 | $16,017 | $16,118 | $13,612 |
| Capital Expenditures (MM) | -$887 | -$591 | -$664 | -$386 |
| Net Current Assets (MM) | -$16,467 | -$13,360 | -$17,110 | -$17,512 |
| Current Ratio | 1.51 | 1.72 | 1.49 | 1.43 |
| Long Term Debt (MM) | $14,475 | $11,578 | $9,018 | $8,416 |
| Net Debt / EBITDA | 1.17 | 0.26 | 0.24 | 0.22 |
Cisco Systems has strong margins with a stable trend and a steady stream of strong cash flows. Additionally, the company's financial statements display low leverage and wider gross margins than its peer group. However, the firm has EPS growth achieved by reducing the number of outstanding shares. Finally, we note that Cisco Systems has stable revenues and decreasing reinvestment in the business and just enough current assets to cover current liabilities.
Cisco Systems's Valuation Is in Line With Its Sector Averages:
Cisco Systems has a trailing twelve month P/E ratio of 18.3, compared to an average of 18.85 for the Telecommunications sector. Based on its EPS guidance of $4.04, the company has a forward P/E ratio of 12.6. The 9.1% compound average growth rate of Cisco Systems's historical and projected earnings per share yields a PEG ratio of 2.0. This suggests that these shares are overvalued. Furthermore, Cisco Systems is likely overvalued compared to the book value of its equity, since its P/B ratio of 5.07 is higher than the sector average of 3.12. The company's shares are currently trading 112.2% above their Graham number. Ultimately, Cisco Systems's strong cash flows, decent earnings multiple, and healthy debt levels factor towards it being fairly valued, its elevated P/B ratio notwithstanding.
There's an Analyst Consensus of Some Upside Potential for Cisco Systems:
The 20 analysts following Cisco Systems have set target prices ranging from $45.0 to $64.0 per share, for an average of $55.65 with a buy rating. As of April 2023, the company is trading -8.4% away from its average target price, indicating that there is an analyst consensus of some upside potential.
Cisco Systems has a very low short interest because 1.3% of the company's shares are sold short. Institutions own 77.4% of the company's shares, and the insider ownership rate stands at 0.08%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 9% stake in the company is worth $20,065,464,990.
