For years, the company's primary business of selling switches and routers has stalled. Is Cisco finally turning the ship around?
The stock price of Cisco Systems, Inc. (NASDAQ:CSCO) has
recently enjoyed a bit of a renaissance. The company, which develops and sells
networking hardware, has seen its shares increase almost 100% over the past
five years compared to the S&P 500 index's 67% return. This, even though
the business has not shown any fundamental improvements in its numbers over the
same period. Don't believe me? Consider: In its 2013 fiscal year, Cisco
reported $48.6 billion in revenue and $10 billion of net income. In its 2017
fiscal year, the company reported...wait for it...$48 billion in revenue and $9.6
billion in net income. That's right, over four whole years, the company's
revenue and net income actually inched down, not up!
So, if the company isn't recording more sales and earning
more income, why are analysts upgrading the stock even after huge moves to the
upside? When one looks under the hood, beyond the headline numbers, there are
reasons to believe the company is past the better part of a major transition,
one that could see it return to growth for years to come. Let's take a look at
what some of these catalysts are and whether they make Cisco's stock a buy for
investors today.
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