Cisco Systems, Inc. (NASDAQ: CSCO)

Sector: Technology Industry: Communication Equipment CIK: 0000858877
Market Cap 306.02 Bn
P/B 6.53
P/E 29.63
P/S 5.30
ROIC (Qtr) 14.36
Div Yield % 2.12
Rev 1y % (Qtr) 7.53
Total Debt (Qtr) 28.09 Bn
Debt/Equity (Qtr) 0.60

About

Cisco Systems, Inc., commonly known as Cisco, is a multinational technology company that operates in the technology industry, with its ticker symbol CSCO. Cisco's business is divided into six categories: Secure, Agile Networks; Internet for the Future; Collaboration; End-to-End Security; Optimized Application Experiences; and Other Products. The company's operations span the globe, with products and services designed to meet the needs of businesses, public institutions, governments, and service providers of all sizes. Cisco's Secure, Agile Networks...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 13.74B provides robust 0.49x coverage of total debt 28.09B, indicating excellent debt servicing capability and financial flexibility.
  • Robust free cash flow of 12.73B exceeds capital expenditure of 1.01B by 12.59x, indicating strong organic growth funding capability.
  • Free cash flow of 12.73B provides exceptional 8.35x coverage of interest expense 1.52B, showing strong debt service ability.
  • Operating cash flow of 13.74B provides strong 4.05x coverage of inventory 3.40B, indicating efficient inventory management.
  • Operating cash flow of 13.74B provides strong 11.27x coverage of operating expenses 1.22B, showing operational efficiency.

Bear case

  • Operating cash flow of 13.74B provides thin coverage of dividend payments of (6.46B) with a -2.13 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Investment activities of 1.41B provide weak support for R&D spending of 9.41B, which is 0.15x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 8.40B provide limited coverage of acquisition spending of (81M), which is -103.70x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 13.74B provides insufficient coverage of deferred revenue obligations of 27.97B, which is 0.49x, raising concerns about future service delivery capabilities.
  • The company's operating cash flow of 13.74B shows concerning coverage of stock compensation expenses of 3.87B, with a 3.55 ratio indicating potential earnings quality issues.

Peer comparison

Companies in the Communication Equipment
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 CSCO Cisco Systems, Inc. 306.02 Bn 29.63 5.30 28.09 Bn
2 MSI Motorola Solutions, Inc. 63.92 Bn 30.21 5.65 9.81 Bn
3 HPE Hewlett Packard Enterprise Co 35.43 Bn -600.50 1.03 22.37 Bn
4 UI Ubiquiti Inc. 33.47 Bn 42.27 12.14 0.17 Bn
5 CIEN Ciena Corp 33.16 Bn 268.82 6.95 1.58 Bn
6 LITE Lumentum Holdings Inc. 25.28 Bn 224.75 13.73 3.28 Bn
7 ASTS AST SpaceMobile, Inc. 19.88 Bn -65.43 1,072.82 0.72 Bn
8 ZBRA Zebra Technologies Corp 12.46 Bn 24.33 2.37 2.32 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.69 2.22
EV to Cash from Ops. EV/CFO 23.70 10.78
EV to Debt EV to Debt 11.60 25.00
EV to EBIT EV/EBIT 23.69 32.18
EV to EBITDA EV/EBITDA 21.16 10.60
EV to Free Cash Flow [EV/FCF] EV/FCF 25.58 -3.32
EV to Market Cap EV to Market Cap 1.06 1.17
EV to Revenue EV/Rev 5.65 27.87
Price to Book Value [P/B] P/B 6.53 5.35
Price to Earnings [P/E] P/E 29.63 2.67
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.60 0.91
Dividend Payout Ratio % Div Payout % (Qtr) 62.70 -25.01
Dividend per Basic Share Div per Share (Qtr) 1.63 0.22
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 50.64 4.46
Interest Coverage Int. cover (Qtr) 9.02 -12.93
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -34.26 -73.93
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -7.34 463.06
Dividend Growth (1y) % Div 1y % (Qtr) 2.52 1.39
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 9.40 204.95
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 16.99 -1.04
EBIT Growth (1y) % EBIT 1y % (Qtr) 20.90 238.24
EBT Growth (1y) % EBT 1y % (Qtr) 21.52 173.82
EPS Growth (1y) % EPS 1y % (Qtr) 11.11 8.68
FCF Growth (1y) % FCF 1y % (Qtr) 11.53 20.80
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 8.79 41.66
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.48 0.76
Cash Payout Ratio Cash Payout (Qtr) 0.44 0.03
Cash Ratio Cash Ratio (Qtr) 0.24 1.20
Current Ratio Curr Ratio (Qtr) 0.93 2.69
Debt to Equity Ratio Debt/Equity (Qtr) 0.60 0.43
Interest Cover Ratio Int Coverage (Qtr) 9.02 -12.93
Times Interest Earned Times Interest Earned (Qtr) 9.02 -12.93
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 28.40 -40.66
EBIT Margin % EBIT Margin % (Qtr) 23.83 -52.32
EBT Margin % EBT Margin % (Qtr) 21.19 -59.46
Gross Margin % Gross Margin % (Qtr) 64.80 39.35
Net Profit Margin % Net Margin % (Qtr) 17.90 -60.72