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 ( 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 ( CSCO ) 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 ( CSCO ) 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 |
|---|---|---|---|---|---|---|---|
| 14.95 | 4.31 | 3.51 | 5.76% | -5.89% | |||
| Motorola Solutions Inc | 33.99 | 77.45 | 5.82 | 109.76% | 5.25% | ||
| Nokia Oyj | 28.17 | 0.91 | 0.85 | -0.21% | -23.39% | ||
| Juniper Networks Inc | 39.41 | 2.70 | 2.19 | 2.82% | -5.8% | ||
| F5 Inc | 24.85 | 3.92 | 4.08 | 4.89% | -1.11% | ||
| Ciena Corp | 36.23 | 3.15 | 2.11 | 3.15% | 16.32% | ||
| Viavi Solutions Inc | 549 | 3.36 | 2.43 | 1.53% | -10.54% | ||
| Calix Inc | 88.88 | 3.40 | 2.49 | -0.9% | 8.27% | ||
| Extreme Networks Inc | 20.05 | 14.31 | 1.19 | 3.68% | -6.9% | ||
| Harmonic Inc | 18.03 | 3.32 | 2.51 | 21.56% | 1.68% | ||
| Digi International Inc | 68.02 | 1.96 | 2.43 | -0.56% | -2.94% | ||
| Clearfield Inc | 37.80 | 1.50 | 2.15 | -1.71% | -60.17% | ||
| Aviat Networks Inc | 27.98 | 1.74 | 1.18 | 1.2% | 4.8% | ||
| Average | 81.03 | 9.81 | 2.45 | 12.1% | -6.21% |
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By closely examining Cisco Systems ( CSCO ), we can identify the following trends:
The stock's Price to Earnings ratio of 14.95 is lower than the industry average by 0.18x, suggesting potential value in the eyes of market participants.
The current Price to Book ratio of 4.31, which is 0.44x the industry average, is substantially lower than the industry average, indicating potential undervaluation.
The Price to Sales ratio of 3.51, which is 1.43x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
With a Return on Equity (ROE) of 5.76% that is 6.34% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.
The company exhibits higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $3.7 Billion, which is 17.62x above the industry average, implying stronger profitability and robust cash flow generation.
The company has higher gross profit of $8.22 Billion, which indicates 15.51x above the industry average, indicating stronger profitability and higher earnings from its core operations.
The company's revenue growth of -5.89% exceeds the industry average of -6.21%, indicating strong sales performance and market outperformance.
The debt-to-equity (D/E) ratio assesses the extent to which a company relies on borrowed funds compared to its equity.
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.
In terms of the Debt-to-Equity ratio, Cisco Systems ( CSCO ) stands in comparison with its top 4 peers, leading to the following comparisons:
Cisco Systems ( CSCO ) is in a relatively stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.25.
This implies that the company relies less on debt financing and has a more favorable balance between debt and equity.
The low P/E and P/B ratios of Cisco Systems ( CSCO ) suggest that the company's stock price is relatively undervalued compared to its peers in the Communications Equipment industry. However, the high P/S ratio indicates that investors are willing to pay a premium for the company's revenue. On the other hand, the low ROE and high EBITDA and gross profit margins of Cisco Systems ( CSCO ) reflect potential inefficiencies in utilizing shareholder equity, but strong operational performance and revenue growth compared to industry peers.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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