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General information
Cisco Systems, Inc. designs, manufactures, and sells Internet Protocol (IP)-based networking and other products related to the communications and information technology (IT) industry and provide services associated with these products and their use. The Company provides products for transporting data, voice, and video within buildings, across campuses, and globally.
  • Bad financial results growth rate -10.3% (average between last period year over year growth for revenue and EBITDA), there is slowdown compared to average historical growth rates (2.3%)
  • Dividend yield for the last twelve months 4.0%
  • Free cash flow yield 9.5% (LTM)
  • Share price is 7.6% higher than minimum and 38.5% lower than maximum for the last 3 years
  • The company is undervalued by EV / LTM EBITDA multiple compared to target level (8.7x vs 12.9x)
  • Fundamental value created in LTM (estimate) -2.8%
Key Financials
Ticker: CSCO
Share price, USD: 35.71
Common stocks: 4 242 262 571
Dividend Yield:  4.0%
FCF Yield LTM: 9.5%
EV / LTM EBITDA: 8.7x
Last revenue growth (y/y):  -9.5%
Last growth of EBITDA (y/y):  -11.1%
Historical revenue growth:  1.0%
Historical growth of EBITDA:  3.5%
Target EV / EBITDA (hist 75% percentile): 12.9x
Fundamental value created in LTM: -2.8%
EV / LTM EBITDA mutiple calculation
Market Cap ($m): 151 491
Net Debt ($m): -14 836
EV (Enterprise Value): 136 655
EBITDA LTM ($m): 15 642
EV / LTM EBITDA: 8.7x

Revenue and EBITDA

Quarterly values ($m)

Change (y/y)

Cash Flow

Free Cash Flow ($m)

Net Debt / Cash and Equivalents ($m)

Share price and dividends

Share price

Payment USD per share

Multiple and potential

EV / LTM EBITDA and 75% percentile

Potential dynamics

Value Creation

Fundamental Value Creation is calculated as ratio of value created in the last period to current market cap of the company.

The fundamental value can be created in two ways:
• cash generation in form of dividend payments or debt reduction or share buybacks
• growth of the company enterprise value through improving financial results

The growth of enterprise value in the last period is estimated as product of:
• annualized increase of EBITDA in the last reporting period year over year
• relevant EV/EBITDA multiple (average between actual EV/EBITDA for the company and average general level of 10.0x is applied)

Parameter
#
Formula
Value
    
    
            EBITDA (pre LTM Q)
(1)
4 154
            EBITDA (last Q)
(2)
3 691
            EBITDA LTM
(3)
15 642
    
    
        EBITDA LTM / last Q
(4)
(3) / (2)
4.238
    Gain of EBITDA (mln $)
(5)
( (2)-(1) ) * (4)
-1 962
    
    
            EV
(6)
139 710
        Mult
(7)
(6) / (3)
8.9x
        Mult common
(8)
const
10.0x
    Mult avg
(9)
avgerage
9.5x
    
    
    Equity+
(10)
(5) * (9)
-18 573
    FCF LTM
(11)
14 399
    
    
Value+
(12)
(10) + (11)
-4 174
Cap
(13)
151 491
    
    
Fundamental value creation
(14)
(12) / (13)
-2.8%

Potential

EBITDA LTM       15 642
 
EBITDA E       15 027
Mult aim       12.9x
 
EV E       194 442
NetDebt corr       -16 555
 
Cap E       210 996
Cap       151 491
Growth potential            39.3%