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Cisco Systems (CSCO)
NASDAQ:CSCO
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Cisco Systems
(NASDAQ:CSCO)74Outperform
Positive Factors
AI and Cloud Growth
Key positives include $750m in Cloud AI orders that are expected to exceed $1B and are converting to sales.
Demand Trends
Cisco's results showed improvement in the demand cycle with revenue and order trends improving across all customer verticals.
Negative Factors
Executive Departure
The announced departure of a key executive, Gary Steele, is a watchpoint for investors due to its potential impact on execution consistency.
Cisco Systems (CSCO) vs. S&P 500 (SPY)
Market Cap
$251.67B
Dividend Yield2.52%
Average Volume (3M)20.76M
Price to Earnings (P/E)27.7
Beta (1Y)0.72
Revenue Growth-5.34%
EPS Growth-30.57%
CountryUS
Employees90,400
SectorTechnology
Sector Strength48
IndustryHardware & Equipment
Share Statistics
EPS (TTM)2.28
Shares Outstanding3,978,292,500
10 Day Avg. Volume19,830,835
30 Day Avg. Volume20,757,349
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)4.66
Price to Cash Flow (P/CF)28.20
P/FCF Ratio31.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$71.19Price Target Upside12.54% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering17
Cisco Systems Business Overview & Revenue Model
Company DescriptionCisco Systems, Inc. is a global technology leader specializing in networking hardware, telecommunications equipment, and high-tech services and products. Founded in 1984 and headquartered in San Jose, California, Cisco is widely recognized for its role in developing Internet Protocol-based networking technologies. The company's core products include routers, switches, cybersecurity solutions, and software-defined networking solutions. Cisco serves a diverse range of customers, including businesses of all sizes, government agencies, and service providers, across various sectors.
How the Company Makes MoneyCisco Systems generates revenue through multiple streams, primarily from the sale of its hardware products such as routers and switches, which are essential components for building and maintaining computer networks. Additionally, Cisco earns revenue from its software offerings, which include network management and security solutions, as well as its extensive portfolio of collaboration tools, such as Webex. The company also offers subscription-based services, which provide recurring revenue, including technical support, advanced threat protection, and cloud-based services. Cisco's strategic partnerships with other technology companies and service providers, along with its focus on innovation and acquisitions, further bolster its earnings by expanding its product and service capabilities.
Cisco Systems Financial Statement Overview
Summary
Cisco Systems demonstrates a stable financial position with strong profitability and efficient cash flow management. The company maintains a healthy balance sheet with moderate leverage and solid equity. While revenue growth is modest, the company continues to generate significant cash flow, supporting its operations and shareholder returns. Future focus should be on enhancing operational margins and sustaining asset growth.Income Statement
Cisco's income statement showcases a solid performance with a Gross Profit Margin of 64.8% and a Net Profit Margin of 16.9% in the TTM period. The Revenue Growth Rate is modest at 0.69% from the previous year, indicating stable sales performance. However, the EBIT Margin has declined to 20.0% compared to the previous year's 22.6%, reflecting slight operational challenges. Overall, profitability remains strong, though there is room for improvement in operational efficiency.80
Positive
Balance Sheet
The balance sheet reflects a healthy financial position with a Debt-to-Equity Ratio of 0.68, indicating moderate leverage. The Return on Equity stands at 20.2%, showcasing efficient use of equity. The Equity Ratio is 37.5%, suggesting robust shareholder equity relative to assets. Despite the strong equity and manageable debt levels, the declining total asset base warrants attention.75
Positive
Cash Flow
Cisco's cash flow is strong, with a Free Cash Flow Growth Rate of 29.7%, highlighting excellent cash generation capabilities. The Operating Cash Flow to Net Income Ratio is 1.48, indicating effective cash conversion from earnings. The Free Cash Flow to Net Income Ratio is 1.44, underscoring strong cash flow relative to net income. The overall cash position is solid, though consistent capital expenditures could impact future cash reserves.78
Positive
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 55.36B | 53.80B | 57.00B | 51.56B | 49.82B | 49.30B | Gross Profit |
| 35.79B | 34.83B | 35.75B | 32.25B | 31.89B | 31.68B | EBIT |
| 14.40B | 12.18B | 15.03B | 13.97B | 12.83B | 13.62B | EBITDA |
| 16.82B | 15.75B | 17.47B | 16.79B | 15.56B | 16.36B | Net Income Common Stockholders |
| 12.12B | 10.32B | 12.61B | 11.81B | 10.59B | 11.21B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 17.85B | 17.85B | 26.15B | 19.27B | 24.52B | 29.42B | Total Assets |
| 124.41B | 124.41B | 101.85B | 94.00B | 97.50B | 94.85B | Total Debt |
| 30.96B | 30.96B | 8.39B | 9.52B | 11.53B | 14.58B | Net Debt |
| 23.45B | 23.45B | -1.73B | 2.44B | 2.35B | 2.77B | Total Liabilities |
| 78.96B | 78.96B | 57.50B | 54.23B | 56.22B | 56.93B | Stockholders Equity |
| 45.46B | 45.46B | 44.35B | 39.77B | 41.27B | 37.92B |
| Cash Flow | Free Cash Flow | ||||
| 12.41B | 10.21B | 19.04B | 12.75B | 14.76B | 14.66B | Operating Cash Flow |
| 13.12B | 10.88B | 19.89B | 13.23B | 15.45B | 15.43B | Investing Cash Flow |
| -20.87B | -20.48B | -5.11B | 1.55B | -5.29B | 3.50B | Financing Cash Flow |
| 8.70B | 6.84B | -11.63B | -16.14B | -12.04B | -18.89B |
Cisco Systems Technical Analysis
Positive
63.26
Price Trends
61.10
Positive
58.97
Positive
53.20
Positive
Market Momentum
0.79
Positive
53.77
Neutral
29.34
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CSCO, the sentiment is Positive. The current price of 63.26 is below the 20-day moving average (MA) of 63.46, above the 50-day MA of 61.10, and above the 200-day MA of 53.20, indicating a neutral trend. The MACD of 0.79 indicates Positive momentum. The RSI at 53.77 is Neutral, neither overbought nor oversold. The STOCH value of 29.34 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CSCO.
Cisco Systems Risk Analysis
Cisco Systems disclosed 38 risk factors in its most recent earnings report. Cisco Systems reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Cisco Systems Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $107.85B | 38.42 | 28.54% | ― | 19.50% | 34.64% | |
74 Outperform | $251.67B | 27.72 | 20.18% | 2.52% | -5.34% | -30.57% | |
73 Outperform | $73.49B | 47.68 | 92.60% | 0.94% | 8.41% | -7.83% | |
72 Outperform | $24.74B | 9.86 | 10.29% | 2.73% | 3.30% | 25.00% | |
60 Neutral | $12.06B | 42.07 | 6.02% | 2.44% | -8.82% | -10.01% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% | |
44 Neutral | $2.05B | ― | -237.76% | ― | -24.49% | -250.61% |
* Technology Sector Average
Performance Comparison
CSCO
Cisco Systems
63.26
15.81
33.32%
EXTR
Extreme Networks
14.56
2.45
20.23%
JNPR
Juniper Networks
35.94
-0.62
-1.70%
MSI
Motorola Solutions
423.06
94.56
28.79%
ANET
Arista Networks
85.52
15.40
21.96%
HPE
Hewlett Packard Enterprise
18.84
1.22
6.92%
Cisco Systems Earnings Call Summary
Earnings Call Date: Feb 12, 2025 | % Change Since: 1.17% | Next Earnings Date: May 14, 2025
Earnings Call Sentiment Positive
Cisco reported a strong quarter with significant growth in AI orders, security, and shareholder returns. Key challenges include a decline in networking revenue and potential impacts from proposed tariffs. Overall, the positive aspects outweigh the negatives, indicating strong business momentum.Highlights
Strong Financial Performance
Revenue, margins, and earnings per share all came in at or above the high-end of guidance ranges. Total revenue was $14 billion, up 9% year-over-year. Non-GAAP net income was $3.8 billion, and non-GAAP earnings per share was $0.94.
Robust AI Infrastructure Orders
AI infrastructure orders with web scalers in Q2 surpassed $350 million, bringing the year-to-date total to approximately $700 million. Cisco is on track to exceed $1 billion of AI infrastructure orders in fiscal year '25.
Record Order Growth
New product orders grew 29%, up 11% organically when excluding Splunk. Enterprise product orders were up 27%, and Service Provider & Cloud product orders soared 75%.
Significant Security Growth
Security orders more than doubled, driven by advanced data management, analytics, and threat detection capabilities from Splunk. Total security was up 117%, excluding Splunk, security grew 4%.
Substantial Shareholder Returns
Returned $2.8 billion in value to shareholders in Q2, totaling $6.4 billion year-to-date. Announced an increase to Cisco’s dividend, and the Board authorized an additional $15 billion in share repurchases.
Lowlights
Networking Segment Decline
Networking revenue was down 3%, with growth in Wireless and Switching offset by a decline in servers.
Impact of Proposed Tariffs
Cisco accounted for the added cost driven by increased tariffs on China, and proposed tariffs on Mexico and Canada, impacting gross margins.
Challenges in On-Prem Webex Suite
Collaboration was up only 1%, with growth in Contact Center and CPaaS offerings partially offset by a decline in On-Prem Webex Suite offerings.
Company Guidance
In the second quarter of fiscal year 2025, Cisco reported robust financial performance, with revenue reaching $14 billion, representing a 9% year-over-year increase. The company achieved non-GAAP net income of $3.8 billion and earnings per share of $0.94, surpassing the high-end of its guidance range. Key growth drivers included a 29% rise in new product orders, double-digit growth in annualized recurring revenue, and subscription revenue, which constituted 56% of total revenue. Cisco's AI infrastructure orders with webscalers exceeded $350 million in Q2, contributing to a year-to-date total of approximately $700 million, with expectations to surpass $1 billion by fiscal year-end. Additionally, Cisco returned $2.8 billion to shareholders and announced a dividend increase, alongside a $15 billion share repurchase authorization. Looking ahead, Cisco provided guidance for Q3 revenue between $13.9 billion and $14.1 billion, with expectations for fiscal year 2025 revenue to range from $56 billion to $56.5 billion.Cisco Systems Corporate Events
Executive/Board Changes
Cisco Systems Anticipates Board Shift as Director Steps Down
Neutral
Oct 11, 2024
Ekta Singh-Bushell has decided not to seek re-election as a director at Cisco Systems, Inc., but will continue to serve in her role until the company’s 2024 annual stockholders’ meeting. This upcoming change presents a significant moment for Cisco as it prepares for a shift in its board’s composition.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.