Cisco Systems (XSGO:CSCO) Intrinsic Value: DCF (Dividends Based)

: $29.20 (As of Today)

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As of today (2023-05-28), Cisco Systems's intrinsic value calculated from the Discounted Dividend model is $29.20.

Note: Discounted Dividend model is only suitable for companies who have a consistant distribution history with more than 5 years. If the company's dividends does not remain steady over a long period, results may not be accurate due to the low consistency. The model is also only suitable for predictable companies (Business Predictability Rank higher than 1-Star). If the company's Predictability Rank is 1-Star or Not Rated, the data will not be stored into our database.

Cisco Systems's Predictability Rank is 4.5-Stars.

Margin of Safety % (DCF Dividends Based) using Discounted Dividend Model for Cisco Systems is -94.01%.

The historical rank and industry rank for Cisco Systems's Intrinsic Value: DCF (Dividends Based) or its related term are showing as below:

XSGO:CSCO' s Price-to-DCF (Dividends Based) Range Over the Past 10 Years
Min: 0.69 Med: 1.52 Max: 16.07
Current: 1.94

During the past 13 years, the highest Price-to-Intrinsic-Value-DCF (Dividends Based) Ratio of Cisco Systems was 16.07. The lowest was 0.69. And the median was 1.52.

XSGO:CSCO's Price-to-DCF (Dividends Based) is ranked better than
54.58% of 273 companies
in the Hardware industry
Industry Median: 1.87 vs XSGO:CSCO: 1.94

Cisco Systems Intrinsic Value: DCF (Dividends Based) Historical Data

The historical data trend for Cisco Systems's Intrinsic Value: DCF (Dividends Based) can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Cisco Systems Annual Data

Trend

Jul13

Jul14

Jul15

Jul16

Jul17

Jul18

Jul19

Jul20

Jul21

Jul22

Intrinsic Value: DCF (Dividends Based)

27.77

30.94

52.02

32.80

40.83

Cisco Systems Quarterly Data
	Jul18	Oct18	Jan19	Apr19	Jul19	Oct19	Jan20	Apr20	Jul20	Oct20	Jan21	Apr21	Jul21	Oct21	Jan22	Apr22	Jul22	Oct22	Jan23	Apr23
Intrinsic Value: DCF (Dividends Based)																37.57	40.83	29.32	32.14	33.33

Competitive Comparison

For the Communication Equipment subindustry, Cisco Systems's Intrinsic Value: DCF (Dividends Based), along with its competitors' market caps and Intrinsic Value: DCF (Dividends Based) data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

Annual Data Quarterly Data

Cisco Systems Intrinsic Value: DCF (Dividends Based) Distribution

For the Hardware industry and Technology sector, Cisco Systems's Intrinsic Value: DCF (Dividends Based) distribution charts can be found below:

* The bar in red indicates where Cisco Systems's Intrinsic Value: DCF (Dividends Based) falls in comparison to its industry or sector. The grey bar indicates the Intrinsic Value: DCF (Dividends Based)'s extreme value range as defined by GuruFocus.

Cisco Systems Intrinsic Value: DCF (Dividends Based) Calculation

This is the intrinsic value calculated from the Discounted Dividend Model with default parameters. H-Model formula is applied here, in which dividends are used in the calculation with two stage of dividend growth. The calculation for H-Model DDM valuation shows as below.

The H-model formula consists of two parts. The first component of the equation adds the value from the high growth rate period, which is called growth stage. The second component of the formula considers the value of the stock based on the long-term growth rate, which is called the terminal stage. It ignores the high growth rate period. In the growth stage, the dividends of company grows at a faster rate. As it cannot grow at that rate forever, a lower rate is used for the terminal stage.

GuruFocus DDM calculator is a two-stage model. The default values are defined as:

1. Discount Rate: d = 10%
A reasonable discount rate assumption should be at least the long term average return of the stock market, which can be estimated from risk free rate plus risk premium of stock market. We used the 10-Year Treasury Constant Maturity Rate as the risk free rate and rounded up to the nearest integer, then added a risk premium of 6% to get the estimated discount rate. Some investors use their expected rate of return, which is also reasonable. A typical discount rate can be anywhere between 6% - 20%.

2. Dividend Growth Rate in the growth stage: g1 = 6.10%
Growth Rate in the growth stage = average dividend growth rate in the past 5 years. If it is higher than 20%, we use 20%. If it is less than 5%, we use 5% instead. => Average Dividend Growth Rate in the past 5 years was 6.10% which is less than 20% and higher than 5% => Growth Rate: 6.10%

3. Years of Growth Stage: y1 = 10

4. Terminal Growth Rate: g2 = 4%

5. Dividends per Share: dividends per share = $1.530.
GuruFocus DCF calculator applies H-Model to the calculation here, using dividends per share TTM as the default.

All of the default settings can be changed in the DCF calculator and the results are calculated automatically.

Cisco Systems's Intrinsic Value: DCF (Dividends Based) for today is calculated as:

Intrinsic Value: DCF (Dividends Based)

Dividends per Share

( g1

g2 )

( d

g2 )

y1 / 2

Dividends per Share

( 1

g2 )

( d

g2 )

1.530

(0.061

0.04)

(0.1

0.04)

10 / 2

1.530

( 1

0.04)

(0.1

0.04)

29.20

Margin of Safety % (DCF Dividends Based)	=	(Intrinsic Value: DCF (Dividends Based)	-	Current Price)	/	Intrinsic Value: DCF (Dividends Based)
	=	(29.2	-	56.65)	/	29.2
	=	-94.01 %

Cisco Systems (XSGO:CSCO) Intrinsic Value: DCF (Dividends Based) Explanation

Unlike valuation methods such as Net Current Asset Value, Tangible Book per Share, Graham Number, Median PS Value etc, discounted Dividends model evaluates the companies based on their power of future dividend distribution instead of their assets.

Be Aware

What you need to know about Discounted Dividends model:

1. The Discounted Dividends model evaluates a company based on its future dividends distribution power
2. Dividend growth is taken into account; therefore a company with a higher dividend growth rate is worth more if everything else is the same.
3. Since we are projecting future growth, it is assumed that the company will grow at the same rate as it did during the past 5 years. Therefore this model works better for the companies with consistently steady dividends distributed.
4. The Discounted Dividends model works poorly for inconsistent dividends distributor like high growth companies.
5. Your expected return from the investment is a reasonable discount rate assumption.
6. A larger margin of safety should be required for companies with less dividends distributed.

You can screen for stocks that trade below their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) and Intrinsic Value: DCF (Dividends Based) with the GuruFocus All-in-One Screener. Companies with a high Predictability Rank that trade at a discount to their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) can be found in the screen of Undervalued Predictable Companies.

Cisco Systems Intrinsic Value: DCF (Dividends Based) Related Terms

Thank you for viewing the detailed overview of Cisco Systems's Intrinsic Value: DCF (Dividends Based) provided by GuruFocus.com. Please click on the following links to see related term pages.

Cisco Systems (XSGO:CSCO) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Hardware » Cisco Systems Inc (XSGO:CSCO) » Definitions » Intrinsic Value: DCF (Dividends Based)

Traded in Other Exchanges

CSCO:USA CSCO:Mexico 0R0K:UK CIS:Germany CSCO:Canada CSCO34:Brazil CIS:Belgium CSCO:Austria CSCO:Argentina

Address

170 West Tasman Drive, San Jose, CA, USA, 95134-1706

Website

https://www.cisco.com

Cisco Systems is the largest provider of networking equipment in the world and one of the largest software companies in the world. Its largest businesses are selling networking hardware and software (where it has leading market shares) and cybersecurity software like firewalls. It also has collaboration products, like its Webex suite, and observability tools. It primarily outsources its manufacturing to third parties and has a large sales and marketing staff—25,000 strong across 90 countries. Overall, Cisco employees 80,000 employees and sells its products globally.