Why Cisco (CSCO) Stock Is Lower Today

NEW YORK (TheStreet) -- Shares of Cisco Systems Inc. (CSCO) are down -1.59% to $24.80 in pre-market trade after the technology company said that it will cut about 6,000 jobs, equal to about 8% of its employees, after reporting a quarter of little sales growth, the Wall Street Journal reports.

The reductions come as Cisco continues to struggle in emerging markets and in selling to cable companies and other service providers.

The moves come as Cisco's fourth quarter financial results topped its projections and showed signs that the worst of a recent slowdown is over, the Journal said.

 

Still, the company still hasn't been able to return to growth. Cisco's fourth-quarter profit was down 1% on revenue that fell 0.5%.

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, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations 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 analysis by TheStreet Ratings Team goes as follows:

  • 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).
  • Net operating cash flow has slightly increased to $3,198.00 million or 3.36% 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 14.40%.
  • 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

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