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Friday, October 30, 2020

Cisco Systems Inc. (NASDAQ:CSCO) Stock is Plummeting, Here is Why

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Cisco Systems Inc. (CSCO) shares are trading at lower $37.85 and the avg recommendation for the stock is Moderate Buy, while the current analyst price target stands at $49.35.

To add more color to this target, the company’s high over the last year is $50.28 and the low is $32.40. Over the last 52 weeks, CSCO is down -23.70% while the S&P 500 is up 8.70%. The catalyst for this interesting swing was the company’s recent earnings report.

A Notable Earnings Report

In the last quarter, CSCO reported a profit of $7.68 billion. Cisco Systems Inc. also saw revenues increase to $12.15 billion. In addition, CSCO has free cash flow of $14.66 billion as of 07-2020. The company’s EBITDA came in at $3.69 billion which compares well with its peers.

CSCO booked profit margins of 22.70%, its Return on Equity (ROE) is 31.20%, and its Return on Assets is 12.20%. All told, it is clear that, CSCO needs to be on your watchlist.

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Of course, we must look beyond the financials and question how well those numbers represent the sustainable earnings power of the business. Investors need to know how sustainable this current run. CSCO has a short ratio of 1.35 and outstanding shares of 4.23B.

Company Outlook

CSCO has seen increased volume after this news and investors are putting their support behind the value proposition. Furthermore, 10-day volume stands at 25.11 million and more growth is possible in the weeks ahead. Traders will also note the company’s earnings per share came in at 2.64. Cisco Systems Inc. CSCO also noted assets of $94.85 billion at the end of the last quarter. Investors should also keep an eye on sector updates as CSCO has historically followed its peers on positive news.

All told, Cisco Systems Inc. CSCO has strung together solid data and demonstrated underlying fundamentals. At its current valuation, CSCO represents an interesting risk/reward case. Traders should stay tuned to see if this recent report will push the stock to test recent resistance levels.

Cisco Systems Inc. CSCO is now commanding a market cap of 162.49B and a float of 4.22B. CSCO is increasing its credibility in this sector and that could lead to more upside down the line. Sign-up for continuing coverage on shares of CSCO stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in CSCO, either long or short, and we have not been compensated for this article.

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