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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 (NASDAQ: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 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 | 15.97 | 4.16 | 3.48 | 4.1% | $3.45 | $8.27 | -12.83% |
| Motorola Solutions Inc | 47.81 | 123.81 | 6.47 | -6.27% | $0.05 | $1.19 | 10.04% |
| Nokia Oyj | 24.16 | 0.94 | 0.96 | 2.08% | $0.66 | $2.23 | -20.34% |
| Juniper Networks Inc | 53.19 | 2.65 | 2.22 | -0.02% | $0.04 | $0.68 | -16.25% |
| F5 Inc | 20.69 | 3.44 | 3.70 | 4.11% | $0.17 | $0.54 | -3.1% |
| Ubiquiti Inc | 25.69 | 347.05 | 4.70 | 1503.1% | $0.12 | $0.17 | 7.69% |
| Ciena Corp | 45.43 | 2.36 | 1.68 | -0.58% | $0.04 | $0.39 | -19.58% |
| Calix Inc | 121.49 | 3.02 | 2.32 | 0.01% | $0.0 | $0.12 | -9.48% |
| Harmonic Inc | 19.52 | 3.39 | 2.41 | -1.91% | $-0.01 | $0.06 | -22.57% |
| Digi International Inc | 60.47 | 1.52 | 1.93 | 0.73% | $0.02 | $0.06 | -3.1% |
| Aviat Networks Inc | 24.72 | 1.35 | 0.88 | 1.33% | $0.01 | $0.04 | 33.7% |
| Average | 44.32 | 48.95 | 2.73 | 150.26% | $0.11 | $0.55 | -4.3% |
Through a detailed examination of Cisco Systems, we can deduce the following trends:
The stock's Price to Earnings ratio of 15.97 is lower than the industry average by 0.36x, suggesting potential value in the eyes of market participants.
Considering a Price to Book ratio of 4.16, which is well below the industry average by 0.08x, the stock may be undervalued based on its book value compared to its peers.
The stock's relatively high Price to Sales ratio of 3.48, surpassing the industry average by 1.27x, may indicate an aspect of overvaluation in terms of sales performance.
The company has a lower Return on Equity (ROE) of 4.1%, which is 146.16% below the industry average. This indicates potential inefficiency in utilizing equity to generate profits, which could be attributed to various factors.
Compared to its industry, the company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $3.45 Billion, which is 31.36x above the industry average, indicating stronger profitability and robust cash flow generation.
With higher gross profit of $8.27 Billion, which indicates 15.04x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.
The company is witnessing a substantial decline in revenue growth, with a rate of -12.83% compared to the industry average of -4.3%, which indicates a challenging sales environment.
The debt-to-equity (D/E) ratio provides insights into the proportion of debt a company has in relation to its equity and asset value.
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.
By analyzing Cisco Systems in relation to its top 4 peers based on the Debt-to-Equity ratio, the following insights can be derived:
Among its top 4 peers, Cisco Systems is placed in the middle with a moderate debt-to-equity ratio of 0.7.
This implies a balanced financial structure, with a reasonable proportion of debt and equity.
For Cisco Systems, the PE and PB ratios are low compared to peers, indicating potential undervaluation. However, the high PS ratio suggests overvaluation based on revenue. The low ROE and revenue growth, along with high EBITDA and gross profit, may indicate operational efficiency but limited growth potential in the Communications Equipment industry.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
Posted In: CSCO
