Cisco on the Mend (NASDAQ:CSCO)
Shares of Cisco Systems, Inc. (NASDAQ:CSCO) were battered this year with shares trading well below the $22.34/share high it had earlier this year. However, shares appear to be gaining some traction in the past few months and the company may be on the road to recovery.
Cisco’s industry, Networking and Communication Devices, is inherently more volatile than Computer Systems or Personal Computers, the sectors for IBM, AAPL and HPQ. The way we connect to information and entertainment is changing every day. Cisco just launched a new set of cloud services on 12/7/11, called CloudVerse, aimed at adding management capabilities to public, private and hybrid clouds and serve Cloud Service Providers (CSPs), so Cisco is staying on top of the curve.
It's a good buy with a low beta compared to their major competitors: the price to earnings ratio for CSCO is 16.34, compared to 24.59 for Juniper Networks, Inc. (JNPR), 80.56 for Riverbed Technology, Inc. (RVBD) and 40.02 for Aruba Networks, Inc. (ARUN). And the company is leveraging its relative stability to become one of the first in its sector to pay dividends, a new development this year. All in all, the stock is a good buy on a discounted cash flow basis but over the long-term, questions remain about Cisco's viability. Cisco shares are worth $22 apiece using a 10% cost of equity.
Shares are trading around $19 at the time of writing, against their 52-week trading range of $13.24 to $22.09. At the current market price, the company is capitalized at $101.01 billion. Earnings per share for the last year were $1.15, and it paid a dividend of $0.24, yielding 1.28%.