Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, networking giant Cisco Systems
With that in mind, let's take a closer look at Cisco's business and see what CAPS investors are saying about the stock right now.
Cisco facts
| Headquarters (Founded) | San Jose, Calif. (1984) |
| Market Cap | $84.0 billion |
| Industry | Communications equipment |
| Trailing-12-Month Revenue | $43.22 billion |
| Management | Chairman/CEO John Chambers CFO Frank Calderoni |
| Return on Equity (Average, Past 3 Years) | 16.6% |
| Cash/Debt | $44.6 billion / $16.8 billion |
| Dividend Yield | 1.5% |
| Competitors |
Alcatel-Lucent Hewlett-Packard Juniper Networks |
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 95% of the 10,933 members who have rated Cisco believe the stock will outperform the S&P 500 going forward. These bulls include All-Stars cibient and MagicDiligence.
Just last month, cibient tapped Cisco as a tempting turnaround play:
Awesome balance sheet, a small dividend. ... Cisco has had some flops, especially in the consumer divisions, but their bread-and-butter is in the hardware making up the Internet backbone. Last I checked, the Internet is still growing.
Cisco even boasts a robust three-year average operating margin of 20.5%. That's higher than that of main rivals Alcatel-Lucent (1.4%), Hewlett-Packard (9.9%), and Juniper (17.8%).
CAPS All-Star MagicDiligence elaborates on the bull case:
It's true: Flip, Scientific Atlanta, and Linksys were probably mistakes in hindsight. And public sector IT spending (about 20% of Cisco's revenues) will continue to be weak for some time to come. But the market's fears of Cisco losing significant market share in switches to HP and in routers to Juniper (JNPR) have not been realized. In fact, both of those firms are now reporting weak results just like Cisco did 9 months ago. The firm returned to sales growth in Q4 and margins seem to be stabilizing. A renewed focus on areas where the company has sustainable competitive advantages and $1 billion in operating cost cuts should return operating profitability to historical norms near 25%. Cisco has always bought back prolific numbers of shares and now pays a dividend to boot. And it's not like network traffic has flat lined ... the Internet is still experiencing 30-40% year-over-year traffic increases! With the proliferation of "smart" devices, this trend doesn't look to slow down anytime soon.
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