For those of you that have not seen a report from Shane Edmund Group LLC, you may be surprised at what you find inside. We are not your typical research firm. We look at more than just a company's fundamentals. We investigate this in addition to other key metrics such as:
- Technical Analysis
- Management Assessment
- Probability Analysis
- Historical Model Research to Assess Probable Price Movements
- Provide an overall conclusion encompassing our minds around the BIG picture.
Here is a brief glimpse of an HTML version of our report. Our PDF version is formatting completely different and is much easier to read. I highly suggest going that route. For content preview purposes, here is a quick peak...
|Cisco Systems Stock Report (Nasdaq: CSCO) – Created On: 9/12/2010|
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|Company Name:||Cisco Systems, Inc.|
|Primary Industry:||Networking/Com. Devices|
|200 Day Avg. Price:||23.83|
|Cash Flow/Share (1 Yr):||-$0.59|
|Dividend (Yield):||N/A – No Dividend||52 Week Range: $19.82 to $27.74|
SYNOPSIS OF KEY FUNDAMENTAL RATIO/METRICS |
|Current Ratio:||3.164||This ratio helps measures the liquidity of a company and helps assess risk.|
|Quick Ratio (Acid Test):||3.086||This ratio also measures liquidity, but does not account for inventory.|
|Net Working Capital:||0.492||This ratio helps assess how much capital the company has relative to assets.|
|Return On Assets:||0.105||This ratio helps put into perspective the company’s % gain on its assets.|
|Return On Equity:||0.169||This ratio helps put into perspective the company’s % gain on its equity.|
|Profit Margin:||0.183||This ratio simply calculates the net income divided by total amount of sales.|
|A/R Turnover:||6.373||This ratio helps show how quickly money is being collected for credit sales.|
|Inventory Turnover:||11.606||This ratio is an excellent indicator of inventory management efficiencies.|
|Debt to Equity:||0.784||This ratio is an indicator of a company’s leverage and financial risk taking.|
|Assets Turnover:||0.575||This ratio helps us measure how long management holds its assets for.|
|Interest Coverage:||16.018||This ratio helps in seeing how able the company is to pay its debt payments.|
|Dividend Payout:||N/A||This ratio aides us in determining the sustainability of current dividends.|
|Sales Growth to A/R Growth:||3.382||This ratio relates sales growth to increases in credit to determine quality.|
|Sales Growth Rate:||21.48%||This metric shows the growth rate of the top line over the past 12 months.|
|A/R Growth Rate:||6.35%||This metric guides us into revealing the quality of the sales growth.|
|SYNOPSIS OF KEY FUNDAMENTAL RATIOS/METRICS|
All of the above ratios are often times calculated based upon the four most current quarters reported to the SEC by the company. We feel that reporting the latest quarter only would not tell the whole story of the company in its entirety. In addition to that, we feel that reporting the last fiscal year may also not be timely as the last fully reported fiscal year could have been three quarters prior. Therefore, this would leave us with the last nine months of business action being unaccounted for. Let us look into what the ratios are telling us about Cisco Systems, Inc. (Nasdaq: CSCO).Liquidity
When assessing the liquidity of Cisco Systems, Inc., one must look at their current ratio to begin to understand how liquid the company is. With a current ratio of 3.164, we know that the company has three times the amount of current assets than it has in current liabilities. Therefore, we can determine the company is quite liquid. Now if we take inventory out of the equation as an acid test, we see that this new number, also called the quick ratio, is still quite large at 3.086. Therefore, even without counting inventory into the equation, the company is still boasting ample liquidity.Earnings Quality
Cisco Systems, Inc. has had a solid four quarters as far as growth rates are concerned. Sales have grown by 21.48% in the past four quarters, while the account receivables have only grown by 6.35%. This is a relationship we like to see. For every $3.382 in sales growth, there was $1.00 in growth for credit sales. This lets us understand that the earnings quality is pristine for Cisco and not temporarily inflated by sales the company has not yet collected money for.Leverage
A major aspect of risk is indicated through how levered a company is relative to its size. If a company with $1,000 in equity has $100,000 in debt, chances are they are a major risk of defaulting if their leverage does not pay off. However, if their leverage does pay off, they could make a lot of money as a result. This double edged sword is sometimes hard for management teams to control. We have already determined the company is liquid on its current obligations with its current financial situation, but what if there is change in this situation? Is the company so leveraged that their financial situation could be easily dissolved?
Fortunately, we feel Cisco Systems has a comfortable balance sheet (as do most largely successful technology companies.) On average, Cisco Systems has $0.784 in debt for every $1 in equity. This helps us indicate the company’s management is doing an excellent job in controlling leverage amounts. We feel that this is a solid indication that leverage is not in issue for CSCO and that if the economy were to deteriorate, CSCO would not deteriorate at an accelerated pace. Cisco Systems could be considered one of the safer technology companies out there to invest in. If the company were to take on a little more risk it would probably be beneficial for shareholders in the long run. An acquisition or investment in property, plant or equipment on credit would not be necessarily a negative thing if the price is a fair value.Returns
The last area we really need to assess is the company’s ability to generate returns on its assets and equity. This ultimately is what owning assets to make money with is all about. Over the last four quarters, Cisco Systems has shown a 10.5% return on its assets, and has done so without much leverage. This means the company is posting solid returns for its lower risk appetite. In addition to this performance, we can see the company has posted a 16.9% return on its equity. This is a impressive return again given the reduced risk the company is taking on.
|MAJOR INSTITUTIONAL HOLDERS|
|In this section we will present to you who the largest shareholders are in Cisco Systems, Inc. (Nasdaq: CSCO). Although it is easy to find this information, we like to report it to our clients so they keep it in mind at all times. At the end of the day, it doesn’t matter which institution owns a stock and which one doesn’t. All that truly matters is how the company is performing and where the shares are priced at relative to this performance. |
However, it is always important to note who does hold a large position of shares within a company. A stock’s price is indicative of supply and demand for shares in a company. The company’s largest shareholders control a large percent of the shares outstanding. It is much easier for a stock to rise if these large holders feel the stock is undervalued. If they all want to get out of the stock, then they could crush the share price as well. Even if these holders can only affect share prices for temporary, short-run price swings, this is still a risk we must note.
|Institution||Percent of Shares Outstanding Owned|
|1. The Vanguard Group, Inc.||3.65%|
|2. State Street Corporation||3.44%|
|3. FMR LLC||2.88%|
|4. BlackRock Institutional Trust Company, N.A.||2.69%|
|5. Capital World Investors||2.36%|
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Disclosure: No positions in CSCO or competitors.