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Cisco (CSCO), Stock Analysis Report by D'ron Forbes of Division One Finance
By: Division One Finance
Notes on Cisco as discovered by Division One Finance:
Intrinsic Value: $78.11
Margin of Safety: $66.40
Quarterly Revenue Growth: -1.72%
Gross Margin: 63.73%
Free Cash Flow Yield: 13.6%
Over 68% of Cisco's market value can be attributed to its earnings power. It's high gross margins and reasonable free cash flow yield suggests the company is very capable of generating returns for investors. Many other tech company's are far too dependent on growth assumptions to maintain their value. As access to capital increases in cost Cisco can continue to operate efficiently.
Cisco makes most of it's revenue from it's Secure, Agile Network, which grew by 10% in their most recent report. This category represents switching, enterprise routing, wireless, and compute. Their second highest revenue earner Internet of the Future saw a 46% increase in revenue driven by the growth in the webscale provider market. The Internet for the Future product category includes their routed optical networking, public 5G, silicon and optics offerings.
The company's Statement of Cash Flows also shows that there are lots of opportunities to gain returns. The amount paid out in dividends has grown each of the last 4 quarters, share repurchasing is in effect which can increase shareholder equity and earnings. It also appears that there has been a reasonable amount spent in the acquisitions department and they have dedicated R&D toward the hybrid work model sweeping across the nation.
Cisco is a buy right now in the $60 range and the Division One Total Return and Retirement index will be maintaining it's position. A decline lower toward $58 would make this an even stronger buy near the 50 to 100 day averages.
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Page Updated Last on: Jan 18, 2022