Cisco Systems, Inc. (CSCO) stock analysis

P/E above its 5-year median

Cisco Systems's P/E of 30.3 is above its own 5-year median of 20.4.

P/E above the industry

Cisco Systems's P/E of 30.3 is above the Computer and Office Equipment median of 26.0.

EV/EBITDA above its 5-year median

Cisco Systems's EV/EBITDA of 26.8 is above its 5-year median of 15.8.

P/B above the industry

Cisco Systems's price-to-book of 7.90 is above the Computer and Office Equipment median of 3.71.

Trading above fair value

The share price of $100.76 is above our fair value estimate of $65.59.

Margin of safety under 20%

The price is 53.6% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew 3.6% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew 2.7% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 30.3% over the last twelve months, against a 5-year average of 4.6% a year.

Growing faster than the industry

Revenue grew 11.8% over the last twelve months; the Computer and Office Equipment median is 11.2%.

Guidance raised

Cisco Systems raised its fiscal 2026 Revenue outlook on May 13, 2026.

Gross margin slipping

Gross margin was 64.5% over the last twelve months, against 64.9% a year earlier.

Return on equity over 15%

Return on equity was 27.3% over the last twelve months and averaged 26.3% over five years.

Return on capital over 10%

Return on invested capital was 20.2%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Cisco Systems's return on equity of 27.3% is above the Computer and Office Equipment median of 7.5%.

Earnings grew over 5 years

Net income grew 4.6% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 21.0% over the last twelve months, against a 5-year average of 20.6%.

Net margin above the industry

Cisco Systems's net margin of 21.0% is above the Computer and Office Equipment median of 3.8%.

High debt

Debt is 58.7% of shareholders' equity, above the 40% we consider low.

Debt rising against equity

Debt to equity rose from 27.9% five years ago to 58.7%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 48.0% of total debt.

Interest well covered

Operating income covers interest expense 10.5 times.

Short-term assets don't cover short-term debts

Current assets are 0.93 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 3.87; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Cisco Systems paid dividends worth 1.7% of the share price over the last twelve months.

Yield below Treasuries

The 1.7% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Cisco Systems yields 1.7%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 49.4% of net income.

Covered by free cash flow

Dividends take 51.3% of free cash flow.