Cisco Systems, Inc. (CSCO) | Investment Case

1. Company Snapshot

1.a. Company Description

Cisco Systems, Inc.designs, manufactures, and sells Internet Protocol based networking and other products related to the communications and information technology industry in the Americas, Europe, the Middle East, Africa, the Asia Pacific, Japan, and China.It provides infrastructure platforms, including networking technologies of switching, routing, wireless, and data center products that are designed to work together to deliver networking capabilities, and transport and/or store data.

The company also offers collaboration products comprising unified communications, Cisco TelePresence, and conferencing, as well as the Internet of Things and analytics software.In addition, it provides security products, such as network security, cloud and email security, identity and access management, advanced threat protection, and unified threat management products.Further, the company offers a range of service and support options for its customers, including technical support and advanced services.

It serves businesses of various sizes, public institutions, governments, and service providers.The company sells its products and services directly, as well as through systems integrators, service providers, other resellers, and distributors.Cisco Systems, Inc.

has strategic alliances with other companies.Cisco Systems, Inc.was incorporated in 1984 and is headquartered in San Jose, California.

Show Full description

1.b. Last Insights on CSCO

Cisco Systems, Inc.'s recent performance was driven by strong Q3 earnings, with revenue growth of 11% year-over-year, fueled by AI innovation, rising security and observability demand, and robust recurring revenue from security and networking. The company's AI infrastructure momentum and strategic partnerships position it for long-term growth. Additionally, its solid dividend profile and attractive valuation support its outlook. Cisco's product revenues rose 15% in Q3, driven by growth in security, observability, and networking. (Source: Cisco's Q3 FY2025 earnings report)

1.c. Company Highlights

Last Price	77.76
Change Percentage	0.01%
Open	77.67
Previous Close	77.75
Market Cap ( Millions)	307237
Volume	12561771
Year High	80.06
Year Low	52.11
M A 50	72.08
M A 200	66.22

FCF Yield	4.25%
Dividend Yield	2.10%
ROE	22.31%
Debt / Equity	59.93%
Net Debt / EBIDTA	120.22%
Price To Book	6.56
Price Earnings Ratio	29.78
Price To FCF	23.53
Price To sales	5.33
EV / EBITDA	19.96

2. Cisco's Q1 Results Exceed Expectations with Strong AI-Driven Growth

Cisco reported a robust start to fiscal 2026, with Q1 revenue increasing 8% year over year to $14.9 billion, driven by a 10% growth in product revenue. The company's non-GAAP EPS grew 10% to $1, surpassing analyst estimates of $0.982. The strong revenue growth was led by AI infrastructure and campus networking solutions, with total product orders rising 13% year over year. Cisco's guidance for Q2 expects revenue to be in the range of $15 billion to $15.2 billion, with non-GAAP gross margin between 67.5% and 68.5%.

Publication Date: Nov -14

                                    📋 Highlights
                                    Revenue Growth:
                                                Q1 revenue rose 8% YoY to $14.9 billion, with product revenue up 10% driven by AI infrastructure and campus solutions.
AI Infrastructure Momentum:
                                                AI infrastructure orders hit $1.3 billion, with $3 billion in expected FY2026 revenue from hyperscalers.
Shareholder Returns:
                                                $3 billion returned to shareholders via dividends and buybacks, exceeding 125% of Q1 free cash flow.
Guidance for FY2026:
                                                Full-year revenue projected at $60.2–61 billion, with non-GAAP EPS of $4.08–$4.14, driven by $3 billion AI sales target.
Enterprise and Public Sector Growth:
                                                Product orders grew 13% YoY, with public sector up 12% and enterprise up 4%, aided by $2 billion+ Neo Cloud pipeline.

                                

AI Infrastructure Driving Growth

AI infrastructure orders totaled $1.3 billion in Q1, with Cisco expecting to recognize roughly $3 billion in AI infrastructure revenue from hyperscalers in fiscal year 2026. The company saw significant growth in AI-related sales, with four major hyperscalers growing triple digits and four meaningful use case wins across different hyperscalers. This momentum is expected to continue, with silicon and enterprise pipeline for Neo Cloud Sovereign Cloud exceeding $2 billion.

Valuation Metrics

With a P/E Ratio of 29.31 and an EV/EBITDA of 20.56, Cisco's valuation suggests that the market is pricing in a certain level of growth. The company's ROIC of 11.96% and ROE of 22.78% indicate a strong ability to generate returns on invested capital. The Dividend Yield of 2.11% and Free Cash Flow Yield of 4.34% also provide a relatively attractive return for investors.

Campus Refresh and Security

Campus refresh momentum is driven by a large installed base of end-of-support equipment, with billions of dollars of installed base still out there. The company's next-gen campus solutions are ramping faster than prior product launches, driven by end-of-life products, AI preparation, and security needs. Security revenue declined 2% in Q1, but Cisco expects mid-teens long-term revenue growth in this segment.

Outlook and Guidance

Cisco's guidance for fiscal year 2026 expects revenue to be in the range of $60.2 billion to $61 billion, with non-GAAP earnings per share expected to range from $4.08 to $4.14. Analysts estimate next year's revenue growth at 6.5%. The company's strong Q1 results and guidance suggest that it is on track to deliver its strongest year yet, driven by AI growth and enterprise campus refresh.

3. NewsRoom

OECD-Cisco research finds stark geographical and generational divides in AI uptake and digital well-being

Dec -04

Source: prnewswire.com

OECD-Cisco research finds stark geographical and generational divides in AI uptake and digital well-being

Dec -04

Source: prnewswire.com

Fisher Asset Management LLC Has $15.91 Million Position in Cisco Systems, Inc. $CSCO

Dec -04

Source: defenseworld.net

Why Pure Storage Stock Took a Dirty Dive Today

Dec -03

Source: fool.com

Cisco Systems, Inc. (CSCO) Presents at UBS Global Technology and AI Conference 2025 Transcript

Dec -02

Source: seekingalpha.com

3 Dirt Cheap Dividend Stocks to Buy and Hold

Dec -02

Source: fool.com

Consumer Tech News (Nov 24-28): Lawmakers Target Meta Over Alleged Fraudulent Ads, U.S. Pushes Taiwan To Boost Chipmaking Investment In America & More

Nov -30

Source: feeds.benzinga.com

Another Big Tech Visionary Left to Launch an AI Startup—Is the AI Boom Really in its Earlier Innings?

Nov -29

Source: 247wallst.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.40%)

6. Segments

Computer Networks

Expected Growth: 5.4%

Cisco Systems’ growth is driven by increasing demand for network infrastructure, IoT devices, and cybersecurity solutions, as well as the adoption of cloud computing and artificial intelligence technologies.

7. Detailed Products

Routers

Cisco routers are designed to connect multiple networks together and route traffic between them, enabling communication between devices on different networks.

Switches

Cisco switches are used to connect devices within a network, allowing them to communicate with each other and share resources.

Firewalls

Cisco firewalls provide network security by controlling incoming and outgoing network traffic based on predetermined security rules.

Wireless Access Points

Cisco wireless access points provide wireless connectivity to devices, allowing them to connect to a network without the use of cables.

Unified Communications

Cisco unified communications solutions integrate voice, video, and data communications, enabling real-time collaboration and communication.

Network Security

Cisco network security solutions provide threat defense, vulnerability management, and incident response, protecting networks from cyber threats.

Data Center Products

Cisco data center products provide a scalable and flexible infrastructure for data center environments, enabling virtualization and cloud computing.

Collaboration Tools

Cisco collaboration tools provide real-time communication and collaboration capabilities, enabling teams to work together more effectively.

IoT Products

Cisco IoT products provide connectivity, security, and analytics for IoT devices, enabling IoT applications and services.

8. Cisco Systems, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Cisco Systems, Inc. has a low threat of substitutes due to its strong brand recognition and high-quality products, making it difficult for substitutes to enter the market.

Bargaining Power Of Customers

Cisco Systems, Inc. has a medium bargaining power of customers due to the presence of large enterprises and governments as customers, which can negotiate prices and terms.

Bargaining Power Of Suppliers

Cisco Systems, Inc. has a low bargaining power of suppliers due to its large scale of operations and diversified supply chain, reducing dependence on individual suppliers.

Threat Of New Entrants

Cisco Systems, Inc. has a low threat of new entrants due to the high barriers to entry in the networking equipment market, including significant capital requirements and technological expertise.

Intensity Of Rivalry

Cisco Systems, Inc. operates in a highly competitive market with intense rivalry among established players, including Hewlett Packard Enterprise, Juniper Networks, and Huawei Technologies.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	15.91%
Debt Cost	6.18%
Equity Weight	84.09%
Equity Cost	8.23%
WACC	7.91%
Leverage	18.92%

11. Quality Control: Cisco Systems, Inc. passed 6 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Cisco

A-Score: 6.1/10

Value: 2.2

Growth: 4.1

Quality: 7.7

Yield: 5.0

Momentum: 8.0

Volatility: 9.7

1-Year Total Return ->

IBM

A-Score: 5.5/10

Value: 1.5

Growth: 3.0

Quality: 6.3

Yield: 6.0

Momentum: 8.0

Volatility: 8.3

1-Year Total Return ->

QUALCOMM

A-Score: 5.3/10

Value: 3.4

Growth: 6.2

Quality: 8.1

Yield: 4.0

Momentum: 4.0

Volatility: 6.0

1-Year Total Return ->

NetApp

A-Score: 5.2/10

Value: 3.4

Growth: 5.8

Quality: 7.2

Yield: 4.0

Momentum: 4.0

Volatility: 7.0

1-Year Total Return ->

HPE

A-Score: 5.0/10

Value: 4.8

Growth: 4.0

Quality: 3.6

Yield: 5.0

Momentum: 7.5

Volatility: 5.3

1-Year Total Return ->

Motorola Solutions

A-Score: 5.0/10

Value: 1.0

Growth: 6.4

Quality: 7.0

Yield: 2.0

Momentum: 4.0

Volatility: 9.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

6.43%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

7.91%

Cisco Systems, Inc. - US17275R1023

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on CSCO

1.c. Company Highlights

Higher Yield

Less Volatile

Better Quality

Earnings Beats

Revenues Beats

Strong Momentum

2. Cisco's Q1 Results Exceed Expectations with Strong AI-Driven Growth

AI Infrastructure Driving Growth

Valuation Metrics

Campus Refresh and Security

Outlook and Guidance

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.40%)

6. Segments

Computer Networks

Expected Growth: 5.4%

7. Detailed Products

Routers

Switches

Firewalls

Wireless Access Points

Unified Communications

Network Security

Data Center Products

Collaboration Tools

IoT Products

8. Cisco Systems, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Cisco Systems, Inc. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

77.76$

Current Price

77.76$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA