Cisco Systems Inc Net Income jumped on 19.6% in 2016 and EBITDA Margin increased on 3.2 pp from 26.9% to 30.1%
17/08/2016 • About Cisco Systems Inc (
$4333) • By InTwits
Cisco Systems Inc reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Cisco Systems Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.5%. At the same time it's a lot of higher than industry average of 6.6%.
- CAPEX is quite volatile: 2,099 in 2016, 6,541 in 2015, 9,475 in 2014, 5,123 in 2013, 2,227 in 2012
- The company has highly profitable business model: ROIC is at 14.7%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Cisco Systems Inc ($4333) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 46,061 | 48,607 | 47,142 | 49,161 | 49,247 | 0.2% |
| Gross Profit | 28,209 | 29,440 | 27,769 | 29,681 | 30,960 | 4.3% |
| SG&A | 11,969 | 11,802 | 11,437 | 11,861 | 11,433 | -3.6% |
| EBITDA | 12,667 | 13,547 | 11,777 | 13,212 | 14,810 | 12.1% |
| Net Income | 8,041 | 9,983 | 7,853 | 8,981 | 10,739 | 19.6% |
Balance Sheet
|
|---|
| Cash | 9,799 | 7,925 | 6,726 | 6,877 | 7,631 | 11.0% |
| Short Term Debt | 31 | 3,283 | 508 | 3,897 | 4,160 | 6.7% |
| Long Term Debt | 16,297 | 12,928 | 20,337 | 21,457 | 24,483 | 14.1% |
Cash flow
|
|---|
| Capex | 1,126 | 1,160 | 1,275 | 1,227 | 1,146 | -6.6% |
Ratios
|
|---|
| Revenue growth | 6.6% | 5.5% | -3.0% | 4.3% | 0.2% | |
| EBITDA growth | 24.7% | 6.9% | -13.1% | 12.2% | 12.1% | |
| Gross Margin | 61.2% | 60.6% | 58.9% | 60.4% | 62.9% | 2.5% |
| EBITDA Margin | 27.5% | 27.9% | 25.0% | 26.9% | 30.1% | 3.2% |
| Net Income Margin | 17.5% | 20.5% | 16.7% | 18.3% | 21.8% | 3.5% |
| SG&A, % of revenue | 26.0% | 24.3% | 24.3% | 24.1% | 23.2% | -0.9% |
| CAPEX, % of revenue | 2.4% | 2.4% | 2.7% | 2.5% | 2.3% | -0.2% |
| ROIC | 15.6% | 15.8% | 12.1% | 13.4% | 14.7% | 1.4% |
| ROE | 16.3% | 18.1% | 13.6% | 15.4% | 17.4% | 2.0% |
| Net Debt/EBITDA | 0.5x | 0.6x | 1.2x | 1.4x | 1.4x | 0.0x |
Revenue and profitability
The company's Revenue showed almost no change in FY2016. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 1.1 pp from 6.7% to 7.8% in FY2016.
Gross Margin increased on 2.5 pp from 60.4% to 62.9% in FY2016. SG&A as a % of Revenue decreased slightly on 0.91 pp from 24.1% to 23.2% in FY2016.
Net Income marign increased on 3.5 pp from 18.3% to 21.8% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 Cisco Systems Inc had CAPEX/Revenue of 2.3%. Cisco Systems Inc's CAPEX/Revenue showed almost no change from FY2013 to FY2016. Average CAPEX/Revenue for the last three years was 2.5%.
Return on investment
The company operates at good ROIC (14.74%) and ROE (17.42%). ROIC increased slightly on 1.4 pp from 13.4% to 14.7% in FY2016. ROE increased slightly on 2.0 pp from 15.4% to 17.4% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.4x and Debt / EBITDA is 1.9x. Net Debt / EBITDA increased on 0.020x from 1.4x to 1.4x in FY2016. Debt surged on 13.0% while cash jumped on 11.0%.
Management team
Cisco Systems Inc's CEO is Charles H Robbins "Chuck". Charles H Robbins "Chuck" has 3 years tenure at the company. Kelly A Kramer is a Cisco Systems Inc's CFO. Kelly A Kramer has spent 3 years at the company.
Appendix 1: Peers in Telecommunications
Below we provide Cisco Systems Inc benchmarking against other companies in Telecommunications industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Hong Kong Television Network Ltd ($1137) | | 107.4% | -82.2% | 8,010.0% | |
| Hanny Holdings Ltd ($275) | | 131.2% | -85.2% | 349.3% | -78.5% |
| CCT Fortis Holdings Ltd ($138) | -24.1% | -55.3% | -71.3% | 207.1% | |
| Xi'an Haitian Antenna Technologies Co Ltd ($8227) | -8.5% | -45.9% | -56.2% | 111.6% | |
| China Trends Holdings Ltd ($8171) | 167.0% | -70.2% | -16.7% | 106.0% | |
| |
|---|
| Median (52 companies) | 8.9% | 9.8% | 9.8% | 8.5% | -8.4% |
|---|
| Cisco Systems Inc ($4333) | | 5.5% | -3.0% | 4.3% | 0.2% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| HKBN Ltd ($1310) | | 84.3% | 86.5% | 86.9% | |
| Netel Technology Holdings Ltd ($8256) | 27.9% | 42.1% | 54.9% | 72.3% | |
| Great World Co Holdings Ltd ($8003) | -11.0% | 43.0% | 45.5% | 67.9% | 42.0% |
| APT Satellite Holdings Ltd ($1045) | 58.7% | 64.1% | 62.5% | 61.0% | |
| CCT Fortis Holdings Ltd ($138) | 5.2% | 44.8% | -15.7% | 58.4% | |
| |
|---|
| Median (49 companies) | 23.6% | 24.3% | 25.0% | 22.7% | 29.8% |
|---|
| Cisco Systems Inc ($4333) | 61.2% | 60.6% | 58.9% | 60.4% | 62.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Asia Satellite Telecommunications Holdings Ltd ($1135) | 86.5% | 85.8% | 81.6% | 82.4% | |
| APT Satellite Holdings Ltd ($1045) | 81.0% | 78.9% | 77.5% | 78.8% | |
| Synertone Communication Corp ($1613) | 44.9% | 48.5% | 49.4% | 51.5% | -77.6% |
| HKBN Ltd ($1310) | | 39.2% | 40.1% | 39.0% | |
| HKT Trust & HKT Ltd ($6823) | 36.3% | 35.0% | 35.9% | 34.9% | |
| |
|---|
| Median (52 companies) | 6.7% | 5.5% | 5.4% | 8.3% | -6.3% |
|---|
| Cisco Systems Inc ($4333) | 27.5% | 27.9% | 25.0% | 26.9% | 30.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| APT Satellite Holdings Ltd ($1045) | 74.3% | 2.5% | 27.2% | 115.8% | |
| Hong Kong Television Network Ltd ($1137) | 12,435.9% | 504.9% | 1,283.5% | 79.4% | |
| Asia Satellite Telecommunications Holdings Ltd ($1135) | 93.8% | 71.7% | 75.0% | 52.8% | |
| China Fiber Optic Network System Group Ltd ($3777) | 4.8% | 16.3% | 13.1% | 31.9% | |
| Directel Holdings Ltd ($8337) | 2.1% | 0.1% | 0.6% | 30.2% | |
| |
|---|
| Median (52 companies) | 2.1% | 3.0% | 3.1% | 2.6% | 3.5% |
|---|
| Cisco Systems Inc ($4333) | 2.4% | 2.4% | 2.7% | 2.5% | 2.3% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Telecom Service One Holdings Ltd ($8145) | 95.0% | 5.4% | 26.7% | 39.8% | 37.4% |
| VTech Holdings Ltd ($303) | 37.6% | 39.5% | 40.0% | 39.8% | 37.9% |
| Coolpad Group Ltd ($2369) | 8.1% | 6.0% | 9.6% | 29.1% | |
| Telecom Digital Holdings Ltd ($8336) | | 13.3% | 20.2% | 18.9% | 16.7% |
| SmarTone Telecommunications Holdings Ltd ($315) | 37.2% | 23.1% | 12.8% | 17.7% | |
| |
|---|
| Median (53 companies) | 7.1% | 5.8% | 5.8% | 5.4% | -1.8% |
|---|
| Cisco Systems Inc ($4333) | 15.6% | 15.8% | 12.1% | 13.4% | 14.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| CCT Land Holdings Ltd ($261) | 10.1x | 23.8x | 48.4x | 44.8x | |
| China Energine International Holdings Ltd ($1185) | | | 13.3x | 31.7x | |
| China Ground Source Energy Industry Group Ltd ($8128) | -1.6x | 3.5x | 14.3x | 11.3x | |
| China Electronics Corp Holdings Co Ltd ($85) | -2.0x | -1.3x | 12.5x | 7.6x | |
| China All Access Holdings Ltd ($633) | 0.9x | 1.8x | 5.2x | 5.6x | |
| |
|---|
| Median (38 companies) | -0.4x | 0.7x | 0.6x | 0.5x | 1.0x |
|---|
| Cisco Systems Inc ($4333) | 0.5x | 0.6x | 1.2x | 1.4x | 1.4x |
