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What To Buy: Cisco Systems Inc's Buy Recommendation Reiterated

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

NEW YORK ( TheStreet) -- Cisco Systems (Nasdaq: CSCO) has been reiterated by TheStreet Ratings as a buy with a ratings score of B. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, expanding profit margins and good cash flow from operations. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • CSCO's revenue growth trails the industry average of 22.4%. Since the same quarter one year prior, revenues slightly increased by 1.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Although CSCO's debt-to-equity ratio of 0.28 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 2.65, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for CISCO SYSTEMS INC is rather high; currently it is at 65.64%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 16.48% trails the industry average.
  • Net operating cash flow has slightly increased to $2,649.00 million or 7.46% when compared to the same quarter last year. Despite an increase in cash flow, CISCO SYSTEMS INC's cash flow growth rate is still lower than the industry average growth rate of 50.33%.

Cisco Systems, Inc. designs, manufactures, and sells Internet protocol (IP) and other products related to the communications and information technology industry worldwide. Cisco Systems has a market cap of $113.7 billion and is part of the technology sector and computer hardware industry. The company has a P/E ratio of 12.00, below the S&P 500 P/E ratio of 18.00. Shares are up 8.2% year to date as of the close of trading on Friday.

You can view the full Cisco Systems Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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