Cisco Systems Inc. (CSCO, Financial) will release its financial results Nov. 15 after market close.
The largest networking company in the world is forecasted by analysts to close the first quarter of fiscal 2018 with an EPS of 60 cents. This average figure for quarterly earnings was produced in a survey of 24 analysts. Compared to the prior-fiscal year quarter, earnings are therefore foreseen to be about flat on average since the conglomerate multinational company closed the comparable of fiscal 2017 with an EPS of 61 cents.
Source: Yahoo Finance
Estimates for first quarter of fiscal 2017 earnings range between a low of 59 cents and a high of 61 cents.
Concerning revenue, this is forecasted to come in at $12.11 billion. This is a mean of an $11.9 billion to $12.18 billion range and a 2% decline from the first quarter of fiscal 2017.
Cisco closed full-fiscal 2017 with a revenue of $48.01 billion, which was split between the following company’s products and services according to the following rates: Services 26%, Switching 29%, NGN Routing 16%, Collaboration 9%, Data Center 7%, Wireless 6%, Security 4%, SP Video 2% and others 1%.
During business model transition, the company says that Cisco Systems has been capable – through a strong execution of its operations – of increasing profitability and producing solid cash flow.
Even though sales went a little bit down to $48 billion in full fiscal 2017 from $49.2 billion in full fiscal 2015, gross and operating margins increased by 430 basis points to 63% and by 1,370 basis points to 24.9%.
GuruFocus assigns Cisco a profitability and growth rating of 8 out of 10.
In full fiscal 2017, the U.S. global conglomerate company produced a cash flow of $13.9 billion, 10.3% growth from full fiscal 2015. Of this amount of cash flow, approximately 61.5% or $8.54 billion was levered free cash flow, that is the amount of cash flow coming from Cisco’s operations in fiscal 2017 and after that the company met its financial obligations. Cisco used this amount of cash flow during the year to pay dividends to its shareholders and to invest in the company for business growth purposes.
Cisco is paying out a part of its free cash flow to the shareholders in the form of dividends according to a 58% rate of its earnings. This is higher than the industry median of 41%. Cisco distributes an annual dividend of $1.16 – through quarterly payments of 29 cents – to its shareholders and if the U.S. global conglomerate company will hold this quarterly dividend constant for the next three quarters, it will lead to a forward dividend yield of 3.41%.
The quarterly dividend was increased by 11.54% from the first quarter of fiscal 2017 dividend of 26 cents to the second quarter of fiscal 2017 dividend of 29 cents. The dividend yield – according to an historical figure of $1.13 for annual dividend and to the current share price – is 3.32% compared to a Standard & Poor's 500 dividend yield of 1.95%. The latter is an annual dividend which has been computed on a 12-month period until September.
During fiscal 2017, the company has implemented share repurchase programs and has bought back approximately 118 million of its own shares. As of July 30, Cisco has a volume of 5.049 billion shares, which is computed on a diluted count basis.
GuruFocus assigns Cisco a financial strength rating of 6 out of 10.
Cisco is trading at $33.99 per share with a market capitalization of $168.31 billion, a price-book (P/B) ratio of 2.56, a price-sales (P/S) ratio of 3.57 versus an industry median of 1.31 and a price-earnings (P/E) ratio of 17.80 versus an industry median of 25.97.
Year to date, Cisco gained 12% and is trading above its 50 and 200 simple moving average lines:
The tech stock is trading only 2.23% below its 52-week high price of $34.75 per share. The 52-week low is $29.12 per share.
According to the chart of Peter Lynch, Cisco Systems is slightly overvalued by the market at the moment since it is trading above its earnings line:
The average target price is $35.73, which represents only a 5% upside in the current market valuation, and the recommendation rating is 2 out of a total of 5.
Disclosure: I have no positions in Cisco.
