Cisco Systems Stock To $54?

Our multi-factor assessment suggests that it may be time to sell CSCO stock. We have, overall, a pessimistic view of the stock, and a price of $54 may not be out of reach. We believe there is a near-equal mix of good and bad in CSCO stock given its overall Moderate operating performance and financial condition. But keeping in mind its High valuation, we think that the stock is Unattractive.

Below is our assessment:

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Let’s get into details of each of the assessed factors but before that, for quick background: With $307 Bil in market cap, Cisco Systems provides Internet Protocol-based networking products and infrastructure platforms including switching, routing, wireless, data centers, collaboration tools, IoT solutions, and analytics software for communications and IT industries.

[1] Valuation Looks High

This table highlights how CSCO is valued vs broader market. For more details see: CSCO Valuation Ratios

[2] Growth Is Moderate

• Cisco Systems has seen its top line grow at an average rate of 3.4% over the last 3 years
• Its revenues have grown 5.3% from $54 Bil to $57 Bil in the last 12 months
• Also, its quarterly revenues grew 7.6% to $15 Bil in the most recent quarter from $14 Bil a year ago.

This table highlights how CSCO is growing vs broader market. For more details see: CSCO Revenue Comparison

[3] Profitability Appears Strong

• CSCO last 12 month operating income was $13 Bil representing operating margin of 22.1%
• With cash flow margin of 25.1%, it generated nearly $14 Bil in operating cash flow over this period
• For the same period, CSCO generated nearly $10 Bil in net income, suggesting net margin of about 18.0%

This table highlights how CSCO profitability vs broader market. For more details see: CSCO Operating Income Comparison

[4] Financial Stability Looks Very Strong

• CSCO Debt was $28 Bil at the end of the most recent quarter, while its current Market Cap is $307 Bil. This implies Debt-to-Equity Ratio of 9.2%
• CSCO Cash (including cash equivalents) makes up $16 Bil of $122 Bil in total Assets. This yields a Cash-to-Assets Ratio of 13.2%

[5] Downturn Resilience Is Weak

CSCO has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• CSCO stock fell 38.6% from a high of $63.96 on 29 December 2021 to $39.27 on 12 October 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 14 February 2025
• Since then, the stock increased to a high of $77.38 on 13 November 2025 $77.38

 
2020 Covid Pandemic

• CSCO stock fell 33.5% from a high of $49.93 on 12 February 2020 to $33.20 on 12 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 22 March 2021

 
2008 Global Financial Crisis

• CSCO stock fell 60.0% from a high of $34.08 on 6 November 2007 to $13.62 on 9 March 2009 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 21 February 2017

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