Cisco Gaining Momentum in High-Growth Areas
We're raising our fair value estimate as the firm becomes less reliant on the hardware refresh cycle.
We're raising our fair value estimate as the firm becomes less reliant on the hardware refresh cycle.
Mark Cash: Cisco reported second-quarter earnings last night, with results that were in line with our expectations as the company grew 5% year per year. As we look forward, we believe Cisco will be able to sustain its growth rate, and we have raised our fair value to $49 per share from $46. We like that Cisco is gaining momentum in high-growth areas like software-defined networking and security for cloud-based environments.
We think that Cisco is becoming less reliant on a hardware refresh cycle as it grows its software-based sales and recurring revenue streams. In addition, Cisco announced $6.5 billion will return to shareholders in the quarter through buybacks and dividends. The company also announced a 6% increase to its dividend, raising the yield to 3%, and still has $24 billion to return to shareholders.
Mark Cash does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.