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In today's rapidly evolving and fiercely competitive business landscape, it is crucial for investors and industry analysts to conduct comprehensive company evaluations. In this article, we will undertake an in-depth industry comparison, assessing Cisco Systems (NASDAQ:CSCO) alongside its primary competitors in the Communications Equipment industry. By meticulously examining crucial financial indicators, market positioning, and growth potential, we aim to provide valuable insights to investors and shed light on company's performance within 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 | 15.83 | 4.12 | 3.45 | 4.1% | $3.45 | $8.27 | -12.83% |
| Motorola Solutions Inc | 48.28 | 125.04 | 6.53 | -6.27% | $0.05 | $1.19 | 10.04% |
| Nokia Oyj | 19.82 | 0.88 | 0.93 | -0.69% | $0.7 | $1.94 | -17.87% |
| Juniper Networks Inc | 53.48 | 2.67 | 2.23 | -0.02% | $0.04 | $0.68 | -16.25% |
| Ubiquiti Inc | 28.62 | 386.54 | 5.23 | 1503.1% | $0.12 | $0.17 | 7.69% |
| F5 Inc | 20.46 | 3.41 | 3.66 | 4.11% | $0.17 | $0.54 | -3.1% |
| Ciena Corp | 47.72 | 2.48 | 1.77 | -0.58% | $0.04 | $0.39 | -19.58% |
| Calix Inc | 1154.33 | 3.02 | 2.44 | -1.06% | $-0.01 | $0.11 | -24.09% |
| Harmonic Inc | 19.61 | 3.41 | 2.42 | -1.91% | $-0.01 | $0.06 | -22.57% |
| Digi International Inc | 67.79 | 1.70 | 2.17 | 0.73% | $0.02 | $0.06 | -3.1% |
| Aviat Networks Inc | 25.94 | 1.41 | 0.92 | 1.33% | $0.01 | $0.04 | 33.7% |
| Average | 148.6 | 53.06 | 2.83 | 149.87% | $0.11 | $0.52 | -5.51% |
When conducting a detailed analysis of Cisco Systems, the following trends become clear:
At 15.83, the stock's Price to Earnings ratio is 0.11x less than the industry average, suggesting favorable growth potential.
Considering a Price to Book ratio of 4.12, which is well below the industry average by 0.08x, the stock may be undervalued based on its book value compared to its peers.
With a relatively high Price to Sales ratio of 3.45, which is 1.22x the industry average, the stock might be considered overvalued based on sales performance.
The Return on Equity (ROE) of 4.1% is 145.77% below the industry average, suggesting potential inefficiency in utilizing equity to generate profits.
With higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $3.45 Billion, which is 31.36x above the industry average, the company demonstrates stronger profitability and robust cash flow generation.
With higher gross profit of $8.27 Billion, which indicates 15.9x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.
The company's revenue growth of -12.83% is significantly below the industry average of -5.51%. This suggests a potential struggle in generating increased sales volume.
The debt-to-equity (D/E) ratio is an important measure to assess the financial structure and risk profile of a company.
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 evaluating Cisco Systems alongside its top 4 peers in terms of the Debt-to-Equity ratio, the following insights arise:
In the context of the debt-to-equity ratio, Cisco Systems holds a middle position among its top 4 peers.
This indicates a moderate level of debt relative to its equity with a debt-to-equity ratio of 0.7, which implies a relatively balanced financial structure with a reasonable debt-equity mix.
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 within the Communications Equipment industry.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
Posted In: CSCO
