In today's fast-paced and highly competitive business world, it is crucial for investors and industry followers to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating Cisco Systems CSCO in relation to its major competitors in the Communications Equipment industry. By closely examining key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and highlight company's performance in the industry.
Cisco Systems Background
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.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Cisco Systems Inc | 15.24 | 4.53 | 3.56 | 8.12% | $4.95 | $9.56 | 7.6% |
| Arista Networks Inc | 41.89 | 12.04 | 14.23 | 8.82% | $0.62 | $0.94 | 28.27% |
| Motorola Solutions Inc | 31.78 | 144.09 | 5.50 | 132.76% | $0.73 | $1.28 | 7.71% |
| Nokia Oyj | 4.62 | 0.83 | 0.74 | 0.66% | $0.51 | $1.93 | -20.17% |
| Juniper Networks Inc | 33.71 | 2.79 | 2.19 | 1.75% | $0.15 | $0.81 | -1.19% |
| F5 Inc | 26.91 | 3.76 | 3.78 | 5.58% | $0.2 | $0.57 | 0.99% |
| Ciena Corp | 28.29 | 2.46 | 1.65 | 3.15% | $0.13 | $0.49 | 16.32% |
| Calix Inc | 60.89 | 3.74 | 2.91 | 2.27% | $0.02 | $0.14 | 11.64% |
| Viavi Solutions Inc | 1013 | 3.34 | 2.18 | 1.43% | $0.04 | $0.14 | -20.08% |
| Extreme Networks Inc | 23.11 | 19.33 | 1.58 | 25.46% | $0.04 | $0.21 | 18.63% |
| NetScout Systems Inc | 23.99 | 0.77 | 1.81 | 1.05% | $0.05 | $0.15 | -13.71% |
| Harmonic Inc | 238.41 | 4.03 | 2.38 | -1.9% | $-0.01 | $0.06 | -18.32% |
| Digi International Inc | 35.58 | 1.60 | 1.98 | 1.19% | $0.02 | $0.06 | 6.08% |
| Clearfield Inc | 12.71 | 1.31 | 1.54 | 0.86% | $0.01 | $0.01 | -47.72% |
| Aviat Networks Inc | 20.49 | 1.76 | 1.09 | 1.8% | $0.01 | $0.03 | 7.77% |
| Average | 113.96 | 14.42 | 3.11 | 13.21% | $0.18 | $0.49 | -1.7% |
Through an analysis of Cisco Systems, we can infer the following trends:
-
With a Price to Earnings ratio of 15.24, which is 0.13x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.
-
Considering a Price to Book ratio of 4.53, which is well below the industry average by 0.31x, the stock may be undervalued based on its book value compared to its peers.
-
The stock's relatively high Price to Sales ratio of 3.56, surpassing the industry average by 1.14x, may indicate an aspect of overvaluation in terms of sales performance.
-
With a Return on Equity (ROE) of 8.12% that is 5.09% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.
-
The company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $4.95 Billion, which is 27.5x above the industry average, indicating stronger profitability and robust cash flow generation.
-
With higher gross profit of $9.56 Billion, which indicates 19.51x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.
-
The company's revenue growth of 7.6% exceeds the industry average of -1.7%, indicating strong sales performance and market outperformance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a financial metric that helps determine the level of financial risk associated with a company's capital structure.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
When comparing Cisco Systems with its top 4 peers based on the Debt-to-Equity ratio, the following insights can be observed:
-
Cisco Systems exhibits a stronger financial position compared to its top 4 peers in the sector, as indicated by its lower debt-to-equity ratio of 0.17.
-
This suggests that the company has a more favorable balance between debt and equity, which can be seen as a positive aspect for investors.
Key Takeaways
The valuation analysis of Cisco Systems in the Communications Equipment industry reveals that the company has a low PE ratio, indicating that its stock is undervalued compared to its peers. The low PB ratio suggests that Cisco Systems is trading at a lower price relative to its book value. However, the high PS ratio implies that the company's stock is relatively expensive compared to its revenue. In terms of profitability, Cisco Systems has a low ROE, indicating lower returns on shareholder equity. On the other hand, the company exhibits high EBITDA, gross profit, and revenue growth, suggesting strong financial performance.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
