Here’s Why Cisco Systems Stock Has Returned Just 9% Since Late 2018

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Cisco Systems Inc (NASDAQ: CSCO) stock price gained just 9% from $43 at 2018 end to around $47 currently, primarily due to favorable changes in its revenues and outstanding share count. During this period, the company witnessed a 4.5% increase in revenues, and a 17% drop in the outstanding share count further helped support revenue per share. Additionally, despite a 13% drop in the P/S multiple, the company’s stock price has risen 9%, but still underperformed the S&P 500, which returned a little over 50% over the same period.

In our interactive dashboard, Why Cisco Stock Moved: CSCO Stock Has Gained 9% Since 2018, we break down the factors behind this move.

(A) CSCO’s Total Revenue has grown 4.5% from $49.3 billion in FY 2018 to $51.6 billion on an LTM basis

  • Cisco’s total revenue first rose from $49.3 billion in FY ’18 to $51.9 billion in FY ’19, but sales then dropped to $49.3 billion in FY ’20 as the pandemic hurt demand.
  • However, sales have since picked up gradually to $51.6 billion by FY ’22 (Cisco’s fiscal year ends in July), and currently stand at around the same level.
  • As of FY ’22, Product sales make up the majority of Cisco’s total revenue, bringing in 74% of the company’s sales, with Services revenue making up the remaining 26%.
  • For additional details about Cisco’s revenues and comparison to peers, see Cisco Systems (CSCO) Revenue Comparison
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(B) Revenue per share (RPS) increased 25% from $9.95 in FY 2018 to $12.45 currently

  • Cisco revenue rose from $49.3 billion in FY ’18 to $51.6 billion currently, while the outstanding share count decreased from around 5 billion in FY 2018 to 4.1 billion currently.
  • Due to this, RPS has jumped from $9.95 in FY ’18 to $12.45 currently.

(C) Price-To-Sales (P/S) multiple for Cisco rose steadily from 4.4x in 2018 end to 5.3x by 2021 end but has since pulled back to 3.8x currently, lower than what it was in late 2018

  • Cisco’s performance since 2018-end saw its P/S multiple rise from 4.4x in 2018 to 5.3x in 2021.
  • Despite Cisco’s stable sales performance over the years, the P/S multiple has dropped to 3.8x currently due to increased uncertainty surrounding global economic conditions.
  • For additional details about the company’s historical returns and comparison to peers, see Cisco Systems (CSCO) Stock Return.

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 Returns Jan 2023
MTD [1]
2023
YTD [1]
2017-23
Total [2]
 CSCO Return 0% 0% 58%
 S&P 500 Return -1% -1% 70%
 Trefis Multi-Strategy Portfolio 0% 0% 214%

[1] Month-to-date and year-to-date as of 1/3/2023
[2] Cumulative total returns since the end of 2016

 

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