Cisco Valuation Faces Test as Analysts Expect Earnings Growth

Cisco Systems (CSCO) is trading at around $111 a share, roughly 30 times its last twelve months of normalized earnings.

This valuation may seem demanding for a networking company, but Cisco's management defends it by pointing out that analysts expect the company's earnings to grow into this multiple.

Looking ahead, consensus estimates put Cisco's earnings at around $5.13 per share in fiscal 2027 and $5.07-$6.12 per share in fiscal 2028, with a forward price-to-earnings ratio of around 20 times for both years.

This represents a decline from the current trailing P/E ratio of around 30 times, but it's essential to note that this drop is not solely due to earnings growth. The company's profit margins are expected to hold steady, while the revenue mix may work against them.