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Why Cisco (CSCO) Stock Is Still A 'Buy'

Stocks in this article: CSCO

NEW YORK (TheStreet) -- TheStreet Ratings team reiterated its "buy" rating for Cisco CSCO Wednesday with a ratings score of A.

Shares of Cisco were gaining 0.3% to $24.57. Cisco stock gained 13.3% in the past three months, and is up 11.4% from the beginning of 2014.

More than 7.5 million shares of Cisco were traded by 11:20 a.m., compared to a daily average trading volume of about 37.6 million.

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TheStreet Ratings team rates CISCO SYSTEMS INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate CISCO SYSTEMS INC (CSCO) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Net operating cash flow has slightly increased to $3,198.00 million or 3.36% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -10.84%.
  • Despite currently having a low debt-to-equity ratio of 0.37, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.19 is very high and demonstrates very strong liquidity.
  • CISCO SYSTEMS INC's earnings per share declined by 8.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CISCO SYSTEMS INC increased its bottom line by earning $1.86 versus $1.49 in the prior year. This year, the market expects an improvement in earnings ($2.04 versus $1.86).
  • The gross profit margin for CISCO SYSTEMS INC is rather high; currently it is at 65.34%. Regardless of CSCO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 18.94% trails the industry average.
  • You can view the full analysis from the report here: CSCO Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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.

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