Cisco Earnings Preview: Stock Moving On The 'Value' Label

seekingalpha2021-05-18

Summary Cisco's all-time-high was $82 in April 2000. Cisco's issues are still the same, but "value" stocks are getting a better bid today. The 6% free-cash-flow yield is compelling, but intrinsic ...

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Comments

CKSAW
2021-05-20
CKSAW
It will hit 54+ after earnings today.
Kikiooi
2021-05-18
Kikiooi
It is going stronger
letsgo8
2021-05-18
letsgo8
Reply pls
- Freddyd:
  [OMG]
- letsgo8:
  Reply plS
mreddeham
2021-05-18
mreddeham
Like n comment.
- Huathk:
  K
brianyen
2021-05-18
brianyen
Nice
- Yt64:
  nice la
nanalim
2021-05-18
nanalim
Like and comment please. Thanks
- Huathk:
  K

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To turn a hardware into a software firm is the toughest of transitions.Hereis a recent earnings preview that talks about Cisco's transition.\nHere is a quick look at Cisco by segment:\nData source: Cisco earnings reports\nReaders should note the \"Security\" line in both the middle and last set of rows.\nSecurity as a percentage of the business hasn't changed much and it's y/y growth has actually slowed but some of that is obviously pandemic-related.\nNote too that 81% of the business is the legacy \"infrastructure platforms\" and the services business. Note too the respective growth rates of both.\nPerformance:\n21-year performance of Cisco vs. S&P 500:\nSource: YCharts software\n6-year performance of Cisco vs. S&P 500:\nSource: YCharts software\nThe last 6 years show some outperformance for Cisco relative to the S&P 500, which I was surprised to see after running the chart.\nCisco today is a lower-beta value stock, which has come back in vogue since the Presidential election in early November, 2020.\nSummary/Conclusion:\nCisco is a low-single-digit organic EPS and revenue grower trading at 16x EPS for an expected \"average\" 3-year EPS growth rate of 4% on revenue growth of 2%.\nClients hold a small position in the stock since it was so out-of-favor from a sentiment standpoint, but unless Chuck Robbins can pull that magical rabbit out of his hat and given the growth history of Security and Applications, \"fair value\" for Cisco might be mid-$60s at the best today.\nPeople often forget, value stocks can trade at a valuation premium too, it's not just growth stocks, since when \"value\" is working like it is today, stocks will be bought to chase the style.\nAfter tax-reform in 2017, Cisco spent a lot of money buying back shares, and pulled down their cash position from $74 billion in late 2017, to just $30.5 billion today.\nThat moved the stock from $36 in late 2017, to the $55-57 area in mid-2019.\nThe irony of this preview is that this is a stock that could work in this market environment as \"growth investing\" fades and value stocks start to see \"PE expansion\" or multiple expansion.\nWe just have to watch that underlying business.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":197825231,"gmtCreate":1621442296723,"gmtModify":1704357768458,"author":{"id":"3554905551767817","authorId":"3554905551767817","name":"CKSAW","avatar":"https://static.tigerbbs.com/e917b967839e5a6048d105b47d2a6804","vip":1,"crmLevel":2,"crmLevelSwitch":0,"authorIdStr":"3554905551767817","idStr":"3554905551767817"},"htmlText":"It will hit 54+ after earnings today.","listText":"It will hit 54+ after earnings today.","text":"It will hit 54+ after earnings today.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/197825231","repostId":1109268627,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":194046438,"gmtCreate":1621329412824,"gmtModify":1704355869025,"author":{"id":"3574639507377836","authorId":"3574639507377836","name":"Kikiooi","avatar":"https://static.tigerbbs.com/81135f833a61d8d0899dff1c77b07e72","vip":1,"crmLevel":5,"crmLevelSwitch":0,"authorIdStr":"3574639507377836","idStr":"3574639507377836"},"htmlText":"It is going stronger&nbsp;","listText":"It is going stronger&nbsp;","text":"It is going stronger","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/194046438","repostId":1109268627,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":194022961,"gmtCreate":1621327659653,"gmtModify":1704355843664,"author":{"id":"3575378189904678","authorId":"3575378189904678","name":"letsgo8","avatar":"https://static.tigerbbs.com/cfa8cd71bc61e78a08bb731667341ac4","vip":1,"crmLevel":2,"crmLevelSwitch":0,"authorIdStr":"3575378189904678","idStr":"3575378189904678"},"htmlText":"Reply pls","listText":"Reply pls","text":"Reply 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[OMG]"},{"id":4365490,"gmtCreate":1621327667463,"gmtModify":1680789467724,"authorId":3575378189904678,"author":{"id":3575378189904678,"idStr":"3575378189904678","authorId":3575378189904678,"name":"letsgo8","avatar":"https://static.tigerbbs.com/cfa8cd71bc61e78a08bb731667341ac4","vip":1,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":194022961,"type":1,"supId":0,"prevId":0,"content":"Reply plS","text":"Reply plS","html":"Reply plS"}],"langContent":"EN"},{"id":194064875,"gmtCreate":1621327158397,"gmtModify":1704355832315,"author":{"id":"3581558525974959","authorId":"3581558525974959","name":"mreddeham","avatar":"https://static.tigerbbs.com/a6fa672c579549dff0b2d3edced5788b","vip":1,"crmLevel":2,"crmLevelSwitch":0,"authorIdStr":"3581558525974959","idStr":"3581558525974959"},"htmlText":"Like n comment.","listText":"Like n comment.","text":"Like n comment.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/194064875","repostId":1109268627,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":4365553,"gmtCreate":1621328022138,"gmtModify":1680789468314,"authorId":3573472992263411,"author":{"id":3573472992263411,"idStr":"3573472992263411","authorId":3573472992263411,"name":"Huathk","avatar":"https://static.tigerbbs.com/43c7168c646d9ea6805194ed0003f1cc","vip":1,"crmLevel":5,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":194064875,"type":1,"supId":0,"prevId":0,"content":"K","text":"K","html":"K"}],"langContent":"EN"},{"id":194069687,"gmtCreate":1621326566649,"gmtModify":1704355822876,"author":{"id":"3584231158405889","authorId":"3584231158405889","name":"brianyen","avatar":"https://static.tigerbbs.com/5b75a71e0efe1b94541f4d141fcfe37a","vip":1,"crmLevel":5,"crmLevelSwitch":0,"authorIdStr":"3584231158405889","idStr":"3584231158405889"},"htmlText":"Nice&nbsp;","listText":"Nice&nbsp;","text":"Nice","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/194069687","repostId":1109268627,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":4365335,"gmtCreate":1621326587191,"gmtModify":1680789454350,"authorId":3584416898370318,"author":{"id":3584416898370318,"idStr":"3584416898370318","authorId":3584416898370318,"name":"Yt64","avatar":"https://static.tigerbbs.com/9824cc246c21cbb20e1583ad744abef8","vip":1,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":194069687,"type":1,"supId":0,"prevId":0,"content":"nice <u>la</u>","text":"nice <u>la</u>","html":"nice <u>la</u>"}],"langContent":"EN"},{"id":194087362,"gmtCreate":1621326428956,"gmtModify":1704355819795,"author":{"id":"3582693378664366","authorId":"3582693378664366","name":"nanalim","avatar":"https://static.tigerbbs.com/7562c2cbacf07201be0244e47614590d","vip":1,"crmLevel":1,"crmLevelSwitch":0,"authorIdStr":"3582693378664366","idStr":"3582693378664366"},"htmlText":"Like and comment please. 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