Cisco is not a pureplay cyber security stock. However, it leads the cybersecurity space with a market share of over 14%. Shares of Cisco (CSCO) have gained just under 3% since the start of April. The stock though is up close to 29% this year.
Though Cisco’s sales growth has been in the low-mid-single digits in the last few years, it has provided impressive returns to investors. The stock has risen at a CAGR (compound annual growth rate) of 27% in the last three years and 19% in the last five years. Cisco’s EPS rose at a CAGR of 7% in the last five years.
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Cisco’s stock is currently trading at $54.94, which is 36% above its 52-week low of $40.25 and 5% below its 52-week high of $57.53.
Is Cisco stock trading at an attractive valuation?
Cisco is trading at a forward PE multiple of 17.2x for 2019 and at 15.8x for 2020. In comparison, the company’s earnings are estimated to rise by 18% in 2019 and then gain 10% in 2020. Cisco also has a dividend yield of 2.5%, which suggests that the stock might still have some upside potential. Its earnings are estimated to grow at a CAGR of 9.9% in the next five years, while sales might rise by 4% annually over the next three years.
Out of 27 analysts covering Cisco, 19 recommend a “buy” and eight recommend a “hold.” There are no “sell” recommendations. The average 12-month price target for Cisco is $55.96, indicating the stock is trading at a discount of just 2% to average estimates.