Cisco Systems, Inc. (NASDAQ: CSCO)
Cisco Systems is arguably the strongest company in the networking arena. When you talk about CSCO, you’re talking about a company that was one of the pioneers in networking, building automation, and more! I recently decided to take a look at this stock in great detail to get an understanding of whether or not this company is really a great investment. After all, I’ve seen many great companies struggle in the market. Nonetheless, I don’t believe that CSCO is going to be one of them – at least, not any time soon. Today, we’ll talk about several factors that I believe make Cisco Systems a great investment decision.
Incredibly Strong Earnings History
First and foremost, investors want to make sure that their money grows. If that wasn’t the case, they wouldn’t be investing. So, earnings are incredibly important to investors. When it comes to CSCO, earnings seem easy to come by. According to NASDAQ, the company has, at the very least, met consensus estimates in the last four consecutive quarters. In two of those quarters, Cisco produced a positive earnings surprise. When you dig a bit deeper, you’ll find that Cisco beat earnings expectations for the four consecutive quarters prior to that as well. It seems that no matter how far back you look, when it comes to CSCO, you’re going to find an incredibly strong earnings history.
CSCO Is Selling At A Discount
As an investor, your ultimate goal is to buy low and sell high, generating a profit on the spread. So, it’s great when you come across a discount that makes doing so easier. With that said, I believe that Cisco Systems is actually trading at a relatively decent discount. This can be seen when looking at the company’s PE ratio. This ratio compares the price of the stock to the earnings the company produces, hence the name, Price to Earnings ratio. A healthy stock generally trades with a price to earnings ratio around 16 or 17. However, that’s not the case of CSCO. As a matter of fact, According to NASDAQ CSCO closed fiscal year 2015 with a price to earnings ratio of 14.15. And it gets better! In fact, the forward looking PE ratio on Cisco Systems for FY16 comes in at 13.47, making this stock’s deal even sweeter.
Strong Analyst Opinions
You don’t have to take my word for the fact that CSCO is a great investment choice – just look at what analysts have to say. According to Yahoo! Finance, 37 analysts are currently weighing in on the stock with only four of them rating it an underperform and none of them rating it a sell. However, 8 do rate CSCO as a strong buy, 12 rate it as a buy and 13 rate it as a hold. This gives CSCO an overall recommendation of buy!
As an investor, I always like to find stocks that have a strong history of solid earnings, sell at a discount and are loved by analysts. When it comes to Cisco Systems, I think I’ve found one. So, if it’s not already on your watch list, you may want to take another look!
What Do You Think?
Where do you think CSCO is headed and why? Let us know in the comments below!
[Image Courtesy of Vernier]