# Cisco Systems (CSCO.US)

Canonical: https://gigainvestors.com/s/CSCO

Analysis as of: 2026-10-16T07:27:47.034Z. Financial observations: FY1997–FY2026.

Listing currency: USD. Reporting currency: USD.

## Verdict

A wonderful business at too high a price

Quality tests for Buy: pass (profit record: pass; earnings resilience is evidence only). Published buy qualification: no.

Share price: $109.85 per share; close as of 2026-10-15.

Estimated value: low $43.14 per share, central $48.59 per share, high $55.83 per share. Buy at or below the central value $48.59 per share. Valuation as of 2026-10-16T07:27:47.034Z; scenarios are not confidence intervals.

Expected annual return: 5.9% at the stated quote. About 5.9% a year at today's price (required return 10.0%). required return 10.0% a year (10% floor; US 10-year bond 5.1% + 4 points).

## Checklist

### understandable: pass

- 3 revenue declines in the last 10 years (informational)

- Financial history: 10 years

- Years with declining revenue: 3

- Years with a net loss: 0

- Operating margin variation: 0.08×

Chart: Operating margin; fiscal year observations.

- FY2017: 0.25×

- FY2018: 0.25×

- FY2019: 0.27×

- FY2020: 0.28×

- FY2021: 0.26×

- FY2022: 0.27×

- FY2023: 0.26×

- FY2024: 0.23×

- FY2025: 0.21×

- FY2026: 0.24×

### moat: pass

- Years with nonpositive invested capital use equity plus debt and leases; positive earnings with no positive capital are shown above 100%.

- ROIC, median of available years: 19.4%

- ROIC, second-lowest year: 11.6%

- Typical minus recent gross margin: -1.0 pp

- Typical gross margin (annual median): 63.5%

- Recent gross margin (lower of latest and 3-year median): 64.5%

- Years with nonpositive capital: 9

- Capital spending / revenue: 1.6%

- ROIC including acquisitions, ten-year median: 38.0%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2017: 9.4%

- FY2018: 11.6%

- FY2019: 19.5%

- FY2020: 20.8%

- FY2021: 19.4%

- FY2022: 22.6%

- FY2023: 23.5%

- FY2024: 13.4%

- FY2025: 14.4%

- FY2026: >100%

### economics: pass

- Owner earnings / net income, 5-yr: 1.13×

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: $65B

- Net income, five-year total: $58B

- Return on incremental invested capital: >100%

- Working capital / revenue, annual change: -0.1 pp

- Working capital / revenue, change between three-year averages: -0.6 pp

- Working capital / revenue, final three-year average: 19.9%

Chart: Annual owner cash / profit; fiscal year observations.

- FY2022: 1.13×

- FY2023: 1.07×

- FY2024: 1.18×

- FY2025: 1.19×

- FY2026: 1.09×

### management: pass

- Historical market-dollar context (not the management verdict): 2017 to 2026 (9 years)

- potential debt-funded buybacks (informational)

- buybacks leaned toward cheaper years (informational)

- ROIC first 3 years vs last 3 years: 11.6% vs 14.4%

- Per-share earnings: 1.90 to 2.55 (three-year endpoint medians)

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 10-year annual growth: -2.4%

- Ordinary dilution, 5-year annual growth: -1.2%

- Market cap gain: $301B

- Cumulative retained earnings: -$19B

- Diluted shares, 10-year annual growth: -2.4%

- Diluted shares, 5-year annual growth: -1.2%

- $1 test, starting fiscal year: FY2017

- $1 test, ending fiscal year: FY2026

- Per-share value growth: 3.7%

- Per-share value change: $0.64

- Per-share value, starting three-year median: $1.90

- Per-share value, ending three-year median: $2.55

- Buybacks concentrated in cheaper years (correlation): 0.08

- Average buyback yield: 3.9%

- Buyback history: 10 years

- Debt-funded buybacks: Yes

- Acquisition spending: $43B

- Cumulative net income, 10 years: $101B

- ROIC, first three-year median: 11.6%

- ROIC, last three-year median: 14.4%

Chart: Earnings per share; fiscal year observations.

- FY2017: $1.90

- FY2018: $0.02

- FY2019: $2.61

- FY2020: $2.64

- FY2021: $2.50

- FY2022: $2.82

- FY2023: $3.07

- FY2024: $2.54

- FY2025: $2.55

- FY2026: $3.33

### accounting: pass

- stock compensation exceeds 15% of operating cash flow

- Sloan accruals: -0.7%

- Receivables to sales index (DSRI): 1.00×

- Restructuring years, last five: 1

- Stock compensation / operating cash flow: 27.0%

- Earnings backed by cash: Yes

- Operating cash / earnings: 1.07×

- Accounting red flags: 1

- Goodwill and intangibles / equity: 1.33×

Chart: Sloan accruals; fiscal year observations.

- FY2017: -3.3%

- FY2018: -12.5%

- FY2019: -4.3%

- FY2020: -4.4%

- FY2021: -5.0%

- FY2022: -1.5%

- FY2023: -7.1%

- FY2024: -0.5%

- FY2025: -3.3%

- FY2026: -0.7%

## Holders

- [Nicolai Tangen](https://gigainvestors.com/AKO): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [David Hoeft](https://gigainvestors.com/DAC): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [Thomas Gayner](https://gigainvestors.com/MKL): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [Andrew Adams](https://gigainvestors.com/MPF): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [Richard Pzena](https://gigainvestors.com/PIM): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [William Browne](https://gigainvestors.com/TB): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [Lee Ainslie](https://gigainvestors.com/mc): tracked 13F investor; follow the investor page for holding quarter and amounts.

## Price story

Price needs cash profits to grow 11.7% a year for ten years · sales +11.8%

Story as of 2026-10-16T09:58:34.939Z; price observation 2026-10-15.

Price needs cash profits to grow 11.7% a year for ten years

- 2025-05-15: Cisco (CSCO) Jumps on Strong Q3 Results, Higher Guidance; AI Orders Top $600M ([finance.yahoo.com](https://finance.yahoo.com/news/cisco-csco-jumps-strong-q3-130623897.html))

- 2025-06-04: CSCO Q1 Earnings Call: AI Demand and New Partnerships Drive Strategic Shift ([finance.yahoo.com](https://finance.yahoo.com/news/csco-q1-earnings-call-ai-130905087.html))

- 2025-11-12: Cisco lifts guidance as Q1 results top estimates on AI-led networking demand ([finance.yahoo.com](https://finance.yahoo.com/news/cisco-lifts-guidance-q1-results-215141234.html))

- 2026-04-23: Cisco Cashes in on AI Order Momentum: More Upside Ahead in 2026? ([finance.yahoo.com](https://finance.yahoo.com/sectors/technology/articles/cisco-cashes-ai-order-momentum-185300068.html))

- 2026-05-14: Cisco raises full-year outlook as AI-driven demand powers Q1 beat ([finance.yahoo.com](https://finance.yahoo.com/sectors/technology/articles/cisco-raises-full-outlook-ai-145300335.html))

- 2026-08-13: Cisco Stock Tumbles 8.8% as AI Hardware Squeezes Margins ([finance.yahoo.com](https://finance.yahoo.com/technology/ai/articles/cisco-stock-tumbles-8-8-173934887.html))

### Sales · FY2025–2026

sales +11.8%; source https://www.sec.gov/Archives/edgar/data/858877/000085887726000132/csco-20260725.htm; observed 2026-09-02.

- FY2017: $48B 

- FY2018: $49B 

- FY2019: $52B 

- FY2020: $49B 

- FY2021: $50B 

- FY2022: $52B 

- FY2023: $57B 

- FY2024: $54B 

- FY2025: $57B 

- FY2026: $63B 

### Gross margin · FY2026

gross margin 64.5%; source https://www.sec.gov/Archives/edgar/data/858877/000085887726000132/csco-20260725.htm; observed 2026-09-02.

- FY2017: 63.0% 

- FY2018: 62.0% 

- FY2019: 62.9% 

- FY2020: 64.3% 

- FY2021: 64.0% 

- FY2022: 62.5% 

- FY2023: 62.7% 

- FY2024: 64.7% 

- FY2025: 64.9% 

- FY2026: 64.5% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Operates in communication equipment; annual sales are USD 63.3 billion.

- Source: https://www.sec.gov/Archives/edgar/data/858877/000085887726000132/csco-20260725.htm (filed 2026-09-02); FY2026: revenue 63325000000; grossProfit 40860000000; margin = grossProfit / revenue.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); CSCO.US: Cisco Systems, Inc. designs, develops, and sells technologies to power, help, secure, and draw insights from the internet in the Americas, Europe, the Middle East, Africa, the Asia Pacific, Japan, and China. The company provides data center switching; network security, identity and access management, and secure access service edge; identity and agentic security solutions; interconnects public and private wireline and mobile networks, delivering connectivity to campus, data center, and branch networks; WEBEX suite, collaboration devices, and contact center; communication platform as a service software, including perpetual licenses, subscription arrangements, and hardware solutions; network assurance and observability suite; accelerated issue resolution, software support, and hardware replacement; professional services, such as planning, design, implementation, and high-value consulting; service and support packages, financing, and managed network services; and regional, national, and international wireline carriers, webscale products, internet, and cable. It also provides wireless products, including indoor and outdoor coverage designed for seamless roaming use of voice, video, and data applications; end-to-end collaboration solutions through cloud, on-premise, or within hybrid cloud environments. In addition, it offers technical support services. The company serves businesses, public institutions, governments, and service providers. It sells its products and services directly, through systems integrators, service providers, and resellers, and distributors. Cisco Systems, Inc. was incorporated in 1984 and is headquartered in San Jose, California.

### Why customers stay

Margins ranged from 64.5% to 64.9% during 2024–26; it earns 19.4% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-09-02); FY2024: grossProfit / revenue = 64.7%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-09-02); FY2025: grossProfit / revenue = 64.9%.

- Source: https://www.sec.gov/Archives/edgar/data/858877/000085887726000132/csco-20260725.htm (filed 2026-09-02); FY2026: grossProfit / revenue = 64.5%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-09-02); 10-year return on capital observations [[2017,0.09377128142695074],[2018,0.11633707995870472],[2019,0.19472611640576915],[2020,0.2082366333336019],[2021,0.1940948405135445],[2022,0.22643770077991335],[2023,0.23465571865431073],[2024,0.13444055749981215],[2025,0.14392678148416377],[2026,2.879445991033164]]; median 0.1944104784596568. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Can it raise prices

Kept about a 63% gross margin through 2022 cost inflation.

- Source: https://www.sec.gov/Archives/edgar/data/858877/000085887726000132/csco-20260725.htm (filed 2026-09-02); Gross margin observations: [[2021,0.6402103657312618],[2022,0.6254824757064996],[2023,0.6272676234253833]]; range within 2 percentage points.

### Where the cash goes

Paid dividends in 10 of 10 years; bought back USD 6.1 billion of shares.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-09-02); FY2017: growth capex 0; upkeep 964000000; owner earnings 10884000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-09-02); FY2018: growth capex 0; upkeep 834000000; owner earnings 1467000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-09-02); FY2019: growth capex 0; upkeep 909000000; owner earnings 12609000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-09-02); FY2020: growth capex 0; upkeep 770000000; owner earnings 12252000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-09-02); FY2021: growth capex 0; upkeep 692000000; owner earnings 11761000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-09-02); FY2022: growth capex 0; upkeep 477000000; owner earnings 13292000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-09-02); FY2023: growth capex 0; upkeep 849000000; owner earnings 13490000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-09-02); FY2024: growth capex 0; upkeep 670000000; owner earnings 12157000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-09-02); FY2025: growth capex 0; upkeep 905000000; owner earnings 12137000000. Growth capex / owner earnings = 0.

- Source: https://www.sec.gov/Archives/edgar/data/858877/000085887726000132/csco-20260725.htm (filed 2026-09-02); FY2026: growth capex 0; upkeep 1410000000; owner earnings 14397000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-09-02); Dividend observations: [[2017,5511000000],[2018,5968000000],[2019,5979000000],[2020,6016000000],[2021,6163000000],[2022,6224000000],[2023,6302000000],[2024,6384000000],[2025,6437000000],[2026,6553000000]]. Zero only counted when supported by a complete cash-flow statement.

- Source: https://www.sec.gov/Archives/edgar/data/858877/000085887726000132/csco-20260725.htm (filed 2026-09-02); FY2026: cash repurchases 6106000000 USD.

### Are managers owners

Insiders own 0.1% of the company.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); CSCO.US SharesStats.PercentInsiders = 0.063 percentage points; cache date 2026-10-16.

### What could break it

"Our financial performance may be negatively impacted by demand for, and costs to deliver" (SEC filing, Sep 2026)

- Source: https://www.sec.gov/Archives/edgar/data/858877/000085887726000132/csco-20260725.htm (filed 2026-09-02); Our financial performance may be negatively impacted by demand for, and costs to deliver

### What the price says

The price assumes cash profits grow 11.7% yearly over ten years; actual growth was 4.6%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-09-02); Ten-year compound average after fade. Initial solved rate 0.15621597602733817. Price 109.85; FX 1; discount 0.1; same standard ten-year fade to terminal 0.03. FY2016 owner earnings/share 2.293435534591195 → FY2026 3.6109857035364934. Closing-price date 2026-10-15.

## Monthly share-price history (USD per share)

- 2016-10: $30.68 per share

- 2016-11: $29.82 per share

- 2016-12: $30.22 per share

- 2017-01: $30.72 per share

- 2017-02: $34.18 per share

- 2017-03: $33.80 per share

- 2017-04: $34.07 per share

- 2017-05: $31.53 per share

- 2017-06: $31.30 per share

- 2017-07: $31.45 per share

- 2017-08: $32.21 per share

- 2017-09: $33.63 per share

- 2017-10: $34.15 per share

- 2017-11: $37.30 per share

- 2017-12: $38.30 per share

- 2018-01: $41.54 per share

- 2018-02: $44.78 per share

- 2018-03: $42.89 per share

- 2018-04: $44.29 per share

- 2018-05: $42.71 per share

- 2018-06: $43.03 per share

- 2018-07: $42.29 per share

- 2018-08: $47.77 per share

- 2018-09: $48.65 per share

- 2018-10: $45.75 per share

- 2018-11: $47.87 per share

- 2018-12: $43.33 per share

- 2019-01: $47.29 per share

- 2019-02: $51.77 per share

- 2019-03: $53.99 per share

- 2019-04: $55.95 per share

- 2019-05: $52.03 per share

- 2019-06: $54.73 per share

- 2019-07: $55.40 per share

- 2019-08: $46.81 per share

- 2019-09: $49.41 per share

- 2019-10: $47.51 per share

- 2019-11: $45.31 per share

- 2019-12: $47.96 per share

- 2020-01: $45.97 per share

- 2020-02: $39.93 per share

- 2020-03: $39.31 per share

- 2020-04: $42.38 per share

- 2020-05: $47.82 per share

- 2020-06: $46.64 per share

- 2020-07: $47.10 per share

- 2020-08: $42.22 per share

- 2020-09: $39.39 per share

- 2020-10: $35.90 per share

- 2020-11: $43.02 per share

- 2020-12: $44.75 per share

- 2021-01: $44.58 per share

- 2021-02: $44.87 per share

- 2021-03: $51.71 per share

- 2021-04: $50.91 per share

- 2021-05: $52.90 per share

- 2021-06: $53.00 per share

- 2021-07: $55.37 per share

- 2021-08: $59.02 per share

- 2021-09: $54.43 per share

- 2021-10: $55.97 per share

- 2021-11: $54.84 per share

- 2021-12: $63.37 per share

- 2022-01: $55.67 per share

- 2022-02: $55.77 per share

- 2022-03: $55.76 per share

- 2022-04: $48.98 per share

- 2022-05: $45.05 per share

- 2022-06: $42.64 per share

- 2022-07: $45.37 per share

- 2022-08: $44.72 per share

- 2022-09: $40.00 per share

- 2022-10: $45.43 per share

- 2022-11: $49.72 per share

- 2022-12: $47.64 per share

- 2023-01: $48.67 per share

- 2023-02: $48.42 per share

- 2023-03: $52.28 per share

- 2023-04: $47.25 per share

- 2023-05: $49.67 per share

- 2023-06: $51.74 per share

- 2023-07: $52.04 per share

- 2023-08: $57.35 per share

- 2023-09: $53.76 per share

- 2023-10: $52.13 per share

- 2023-11: $48.38 per share

- 2023-12: $50.52 per share

- 2024-01: $50.18 per share

- 2024-02: $48.37 per share

- 2024-03: $49.91 per share

- 2024-04: $46.98 per share

- 2024-05: $46.50 per share

- 2024-06: $47.51 per share

- 2024-07: $48.45 per share

- 2024-08: $50.54 per share

- 2024-09: $53.22 per share

- 2024-10: $54.77 per share

- 2024-11: $59.21 per share

- 2024-12: $59.20 per share

- 2025-01: $60.60 per share

- 2025-02: $64.11 per share

- 2025-03: $61.71 per share

- 2025-04: $57.73 per share

- 2025-05: $63.04 per share

- 2025-06: $69.38 per share

- 2025-07: $68.08 per share

- 2025-08: $69.09 per share

- 2025-09: $68.42 per share

- 2025-10: $73.11 per share

- 2025-11: $76.94 per share

- 2025-12: $77.03 per share

- 2026-01: $78.32 per share

- 2026-02: $79.46 per share

- 2026-03: $77.59 per share

- 2026-04: $91.50 per share

- 2026-05: $120.42 per share

- 2026-06: $117.46 per share

- 2026-07: $115.99 per share

- 2026-08: $110.49 per share

- 2026-09: $107.63 per share

- 2026-10: $115.07 per share

## Annual estimated value (USD per share)

- FY2017: low $41.62 per share, central $49.87 per share, high $56.00 per share

- FY2018: low $34.29 per share, central $39.08 per share, high $44.01 per share

- FY2019: low $41.80 per share, central $52.57 per share, high $60.30 per share

- FY2020: low $40.61 per share, central $48.71 per share, high $55.76 per share

- FY2021: low $40.09 per share, central $48.64 per share, high $55.88 per share

- FY2022: low $38.42 per share, central $43.18 per share, high $49.53 per share

- FY2023: low $45.66 per share, central $52.55 per share, high $60.21 per share

- FY2024: low $38.40 per share, central $43.12 per share, high $49.41 per share

- FY2025: low $40.31 per share, central $45.35 per share, high $52.07 per share

- FY2026: low $43.14 per share, central $48.59 per share, high $55.83 per share

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

## Sources

[Original 10-K filing](https://www.sec.gov/Archives/edgar/data/858877/000085887726000132/csco-20260725.htm); period 2026-07-25, filed 2026-09-02.

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.