On Feb. 6, networking expert Cisco Systems
- Cisco delivered more sales than either Wall Street or company management expected, with a return to strong net margins. So, earnings per share met the lofty expectations set by the market, and the stock is trading up by more than 4% today.
- Return on equity got a nice boost, even though the company's common equity balance increased by 15.8% year over year. That's normally the hallmark of a small growth stock, not one with a $170-odd billion market cap and 23 years of operating history.
- Free cash flow is growing about as fast as net income, which is a sign of conservative accounting practices -- and a healthy business.
(Figures in millions, except per-share data)
Income Statement Highlights
|
Q2 2007 |
Q2 2006 |
Change |
|
|---|---|---|---|
|
Sales |
$8,439 |
$6,628 |
27.3% |
|
Net Profit |
$1,921 |
$1,375 |
39.7% |
|
EPS |
$0.31 |
$0.22 |
40.9% |
|
Diluted Shares |
6,291 |
6,248 |
0.7% |
Get back to basics with a look at the income statement.
Margin Checkup
|
Q2 2007 |
Q2 2006 |
Change* |
|
|---|---|---|---|
|
Gross Margin |
63.9% |
67.4% |
(3.5) |
|
Operating Margin |
25.2% |
26.1% |
(0.9) |
|
Net Margin |
22.8% |
20.8% |
2.0 |
Margins are the earnings engine. See how they work.
Management Effectiveness
|
Q2 2007 |
Q2 2006 |
Change* |
|
|---|---|---|---|
|
Return on Assets |
16.9% |
16.8% |
0.1 |
|
Return on Equity |
29.5% |
24.8% |
4.7 |
See how management puts its financial tools to work.
Balance Sheet Highlights
|
Assets |
Q2 2007 |
Q2 2006 |
Change |
|---|---|---|---|
|
Cash + ST Invest. |
$20,681 |
$14,989 |
38.0% |
|
Accounts Rec. |
$2,908 |
$2,819 |
3.2% |
|
Inventory |
$1,642 |
$1,345 |
22.1% |
|
Liabilities |
Q2 2007 |
Q2 2006 |
Change |
|---|---|---|---|
|
Accounts Payable |
$931 |
$684 |
36.1% |
|
Long-Term Debt |
$6,416 |
$0 |
N/A |
Learn the ways of the balance sheet.
Cash Flow Highlights
|
Q2 2007 |
Q2 2006 |
Change |
|
|---|---|---|---|
|
Cash From Ops. |
$2,658 |
$1,865 |
42.5% |
|
Capital Expenditures |
$334 |
$179 |
86.6% |
|
Free Cash Flow |
$2,324 |
$1,686 |
37.8% |
|
$1,869 |
$1,450 |
28.9% |
Find out why Fools always follow the money.
Cash Conversion Checkup
|
Q2 2007 |
Q2 2006 |
Change |
|
|---|---|---|---|
|
Days in Inventory |
46.0 |
55.4 |
(9.4) |
|
Days in Receivables |
33.7 |
36.8 |
(3.1) |
|
Days Payables Outstanding |
26.5 |
29.2 |
(2.7) |
|
Cash Conversion Cycle |
53.2 |
63.0 |
(9.8) |
Read up on cash conversion metrics.
Related Companies:
-
Microsoft
(NASDAQ:MSFT) -
Nortel Networks
(NYSE:NT) -
Motorola
(NYSE:MOT) -
TiVo
(NASDAQ:TIVO) -
Openwave Systems
(NASDAQ:OPWV) -
Hewlett-Packard
(NYSE:HPQ)
Related Foolishness:
- Foolish Forecast: Crusher Cisco
- Top Stocks for Self-Directed Investors
- Openwave: Still a Closed Book
- Foolish Fundamentals: The Balance Sheet
Microsoft is a Motley Fool Inside Value selection, TiVo is a Motley Fool Stock Advisor pick, and Openwave is a bona fide Rule Breaker. Read up on Cisco's competition with a handful of free 30-day trial subscriptions.
Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.
At the time of publication, Anders Bylund had no position in any company mentioned. Fool rules are here.
