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Cisco Systems Inc CSCO

Morningstar Rating
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Stock XNAS Rating as of
$45.77 −0.08 (0.17%)
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As of Delayed Price Post-Trading: $45.84 +0.07
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Company Report

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Cisco: 2024 Investor Day Aligns With Our Long-Term Thesis and $50 Valuation

William Kerwin

We keep our $50 per share fair value estimate for wide-moat Cisco Systems after a positive investor day aligned with our long-term thesis. We continue to like Cisco’s core portfolio between networking and security, which elicits strong switching costs for customers and generates strong profitability. We also like the prospects for the Splunk integration to accelerate Cisco’s software revenue growth. Management provided longer-term financial targets, all of which fit with our model. We see shares as slightly undervalued.

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Price vs Fair Value

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CSCO is trading at a 622% premium.
Price
$45.85
Fair Value
$13.00
Uncertainty
Medium
1-Star Price
$37.40
5-Star Price
$27.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Cisco holds dominant market shares across networking, and leading shares in areas like switching software and software-defined wide-area networking, or SD-WAN, bode well for its position in the next era.

Bears

Cisco’s core markets of networking don’t offer robust growth opportunities, and it has to seek top-line upside from nascent corners or other markets where it is less competitively advantaged.

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Trading Information

Previous Close Price
$45.85
Day Range
$45.36–45.93
52-Week Range
$45.27–58.19
Bid/Ask
$45.77 / $45.85
Market Cap
$184.40 Bil
Volume/Avg
17.4 Mil / 19.4 Mil

Key Statistics

Price/Earnings (Normalized)
11.46
Price/Sales
3.37
Dividend Yield (Trailing)
3.42%
Dividend Yield (Forward)
3.49%
Total Yield
6.25%

Company Profile

Cisco Systems is the largest provider of networking equipment in the world and one of the largest software companies in the world. Its largest businesses are selling networking hardware and software (where it has leading market shares) and cybersecurity software like firewalls. It also has collaboration products, like its Webex suite, and observability tools. It primarily outsources its manufacturing to third parties and has a large sales and marketing staff—25,000 strong across 90 countries. Overall, Cisco employees 80,000 employees and sells its products globally.
Sector
Technology
Industry
Communication Equipment
Stock Style Box
Large Value
Total Number of Employees
84,900
Website
https://www.cisco.com

Competitors

Valuation

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Metric
CSCO
HPE
PANW
Price/Earnings (Normalized)
 11.4610.4953.91
Price/Book Value
 4.041.2021.85
Price/Sales
 3.370.9313.73
Price/Cash Flow
 11.415.0244.54
Price/Earnings
CSCO
HPE
PANW

Financial Strength

Metric
CSCO
HPE
PANW
Quick Ratio
 1.100.430.73
Current Ratio
 1.370.900.84
Interest Coverage
 33.7611.7697.93
Quick Ratio
CSCO
HPE
PANW

Profitability

Metric
CSCO
HPE
PANW
Return on Assets (Normalized)
 15.60%4.38%11.97%
Return on Equity (Normalized)
 36.40%11.96%68.27%
Return on Invested Capital (Normalized)
 26.89%7.91%31.97%
Return on Assets
CSCO
HPE
PANW
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Communication Equipment Industry Comparables

Screen With Investor
1-Day Chart
Name
Price
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
Motorola Solutions Inc
MSI
YdlxjrvzmYdcw$62.3 Bil
 Hewlett Packard Enterprise Co
HPE
HqzkzhzcqFkp$26.0 Bil
 Nokia Oyj
NOKBF
—Pxjjh$21.4 Bil
 Nokia Oyj ADR
NOK
WkrzfsxhbCnf$21.4 Bil
 Telefonaktiebolaget L M Ericsson ADR
ERIC
WjxtrqxyWpfn$21.2 Bil
 Telefonaktiebolaget L M Ericsson Class B
ERIXF
MDBTwv$20.5 Bil
 ZTE Corp Class H
ZTCOF
—Tzdq$16.8 Bil
 Zebra Technologies Corp Class A
ZBRA
DymhmtlghSlykqz$15.6 Bil
 EchoStar Corp Class A
SATS
LwcycQjzl$5.1 Bil

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