Today, we are going to evaluate Cisco Systems, Inc. (CSCO) so as to get clarity on this organization and its current standing from a fundamental perspective. In that process, we hope to give some insight into what this stock may offer as an investment opportunity for prospective investors. To accomplish that, we will be moving from top to bottom in our evaluation. As such, our first point of focus will be a look at the company from a revenue perspective.
Over the course of the prior fiscal quarter, the company saw sales of 12.14B[3. Sales mrq]. That number needs context to grant us any insight: by comparison, we can see an overall change in revenues, on a quarterly year/year basis, of -0.02%. However, in sequential terms, the situation looks a little different, with sales grow by 0% from quarter to quarter. While revenue analysis gives us a strong sense of changing demand trends in the company?s end market, and how the company is executing in terms of its relationship with potential customers, real shareholder value is only truly created by profitability. With this in mind, we turn to the company?s bottom line data.
Cisco Systems, Inc. (CSCO) may offer even more interest as an object of analysis if we zoom in a bit more and look at some of its core trends. For example, the cost of selling goods last quarter was 4.63B, which yielded a gross basic income of 7.51B.
The company?s recently reported data shows total diluted outstanding shares of 4.99B, which implies an overall EPS (or earnings per share) of 0.48. To give the reader a little context that number compares to an analyst consensus expected value of 0.62 in next fiscal quarter EPS data. Next, let?s look ahead at coming performance based on what analysts are projecting for the company more generally, before closing with a survey of the balance sheet and cash flow. Among analysts, the average recommendation for this stock is Overweight. That number represents the product of the work of 28 analysts. It is important to consider the views of the analyst community even though we don?t suggest taking analyst recommendations as face value plans for action in a portfolio. The primary value of looking at analyst opinions is in knowing what sort of views may already be priced into the stock.
If we look at price targets, we can see that analysts currently have things pegged around an average target at about 39.76. When we look at next year, we can things shake out in terms of estimates of a fiscal year forecast to bring about 2.60 in terms of total EPS. That works out to a median P/E ratio basis valuation of right around 15.41 times earnings.
So far, we have covered how the company is doing on both the top and bottom line, as well as what professional analysts believe about its core trends and operational and financial performance going forward. However, we would be remiss if we did not also take a quick look at cash flows and the company?s balance sheet to round out our perspective on the name.
The last thing we like to look at for a company like is the balance sheet. That really is the heart of the company?s ability to weather tough times, and the basis for an experienced investor?s sense of the real downside risk inherent in a stock. So, as we like to see, the balance sheet is the seat of faith for the market. In this case, for CSCO, the company has about 11.04B in cash in the bank, according to its most recent reports. That cash sits opposite about 10.24B in total current liabilities on the ledger. But balance sheet health isn?t a fixed idea. Trends matter. And the best way to understand real risk, particularly where debt levels are concerned, is to trace a line connecting the past with the future. In this case, the company?s debt has been growing. The company also has 130.52B in total assets, balanced by 64.97B in total liabilities. That should put things into perspective quite a bit more in terms of how one can justify the current market cap of the stock.
Finally, we want to take a peek at cash flows. In this case, the company saw free cash flowing at 2.91B last quarter, which represents a net change for the quarter in cash levels of (665M). That works out to about 3.08B in terms of cash flow on a net operating basis.
This is certainly an interesting story and one we plan to check back on soon.
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