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

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 10.7%. Since the same quarter one year prior, revenues slightly increased by 3.3%. 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.
  • Despite currently having a low debt-to-equity ratio of 0.36, 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 2.99 is very high and demonstrates very strong liquidity.
  • The gross profit margin for CISCO SYSTEMS INC is rather high; currently it is at 66.40%. 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 11.00% trails the industry average.
  • CISCO SYSTEMS INC's earnings per share declined by 33.3% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, CISCO SYSTEMS INC reported lower earnings of $1.16 versus $1.32 in the prior year. This year, the market expects an improvement in earnings ($1.71 versus $1.16).

Cisco Systems, Inc. designs, manufactures, and sells Internet protocol (IP)-based networking and other products related to the communications and information technology industry worldwide. The company has a P/E ratio of 14.5, equal to the average computer hardware industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Cisco Systems has a market cap of $91.5 billion and is part of the technology sector and computer hardware industry. Shares are down 16% year to date as of the close of trading on Thursday.

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