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Cisco Systems Inc CSCO

Morningstar Rating
$49.13 +0.73 (1.51%)
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Company Report

Cisco Earnings: We Trim Our Valuation 6% to $50 Behind Management’s Lowered Outlook

We trim our fair value estimate for wide-moat Cisco Systems to $50 per share, from $53, as weak guidance for the rest of fiscal 2024 leads us to reduce our short-term forecasts. Cisco continues to see lower demand as its large customers work through inventory stockpiles following two years of overordering. While we’d previously seen management’s expectations for a short-lived correction as rosy, new fiscal 2024 guidance is still well below our prior forecast. We remain fans of Cisco’s long-term position, with heady profits, cash flow, and a good dividend. The short term, however, looks weak. With a market selloff after the release commensurate with our valuation cut, we continue to see shares as close to fair value.

Price vs Fair Value

CSCO is trading at a 2% discount.
Price
$49.12
Fair Value
$89.00
Uncertainty
Medium
1-Star Price
$21.90
5-Star Price
$63.00
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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News

Trading Information

Previous Close Price
$48.40
Day Range
$48.2349.47
52-Week Range
$45.5658.19
Bid/Ask
$49.02 / $49.10
Market Cap
$198.94 Bil
Volume/Avg
25.2 Mil / 20.0 Mil

Key Statistics

Price/Earnings (Normalized)
11.91
Price/Sales
3.51
Dividend Yield (Trailing)
3.18%
Dividend Yield (Forward)
3.26%
Total Yield
5.64%

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

Competitors

Valuation

Metric
CSCO
PANW
ANET
Price/Earnings (Normalized)
11.9160.2541.62
Price/Book Value
4.3022.1812.45
Price/Sales
3.5113.9915.58
Price/Cash Flow
12.4444.8544.55
Price/Earnings
CSCO
PANW
ANET

Financial Strength

Metric
CSCO
PANW
ANET
Quick Ratio
1.100.743.16
Current Ratio
1.370.834.39
Interest Coverage
33.7655.88
Quick Ratio
CSCO
PANW
ANET

Profitability

Metric
CSCO
PANW
ANET
Return on Assets (Normalized)
17.02%12.10%26.49%
Return on Equity (Normalized)
38.38%88.54%36.91%
Return on Invested Capital (Normalized)
30.59%32.00%34.52%
Return on Assets
CSCO
PANW
ANET
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