DCF Studio

    CSCO · NMS · Technology

    Cisco Systems, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 60.02

    Market price

    USD 101.61

    Implied upside

    -40.9%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2026-07-31

    AdjustedReported capital expenditure averages 1.64% of revenue against depreciation of 4.17%. A business cannot depreciate more than it invests indefinitely. Capex has been set to 4.17% of revenue so the forecast is not handed free growth. Override it if the reported figure is right.

    Current EV/EBITDA of 22.3x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 60.02-40.9%
    Exit multiple
    USD 96.91-4.6%
    Market price
    USD 101.61

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn9bn19bnFY27FY28FY29FY30FY31FY32FY33FY34FY35FY36
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31FY32FY33FY34FY35FY36CAGR
    RevenueUSD 73.2bnUSD 78.1bnUSD 82.9bnUSD 87.6bnUSD 92.1bnUSD 96.4bnUSD 100.3bnUSD 103.9bnUSD 107.0bnUSD 109.7bn+4.6%
    EBITUSD 18.1bnUSD 19.3bnUSD 20.5bnUSD 21.7bnUSD 22.8bnUSD 23.8bnUSD 24.8bnUSD 25.7bnUSD 26.4bnUSD 27.1bn+4.6%
    NOPATUSD 15.1bnUSD 16.1bnUSD 17.1bnUSD 18.1bnUSD 19.0bnUSD 19.9bnUSD 20.7bnUSD 21.5bnUSD 22.1bnUSD 22.7bn+4.6%
    Add depreciation & amortisationUSD 3.0bnUSD 3.3bnUSD 3.5bnUSD 3.6bnUSD 3.8bnUSD 4.0bnUSD 4.2bnUSD 4.3bnUSD 4.5bnUSD 4.6bn+4.6%
    Less capital expenditureUSD -3.0bnUSD -3.5bnUSD -4.1bnUSD -4.6bnUSD -5.2bnUSD -5.8bnUSD -6.4bnUSD -7.0bnUSD -7.6bnUSD -8.2bn+11.7%
    Capex, % of revenue4.2%4.5%4.9%5.3%5.6%6.0%6.4%6.8%7.1%7.5%-
    Less increase in working capitalUSD -1.3bnUSD -673.1mUSD -662.0mUSD -643.1mUSD -616.2mUSD -581.3mUSD -538.5mUSD -488.1mUSD -430.4mUSD -366.1m-13.5%
    Free cashflow to firmUSD 13.8bnUSD 15.2bnUSD 15.9bnUSD 16.5bnUSD 17.1bnUSD 17.5bnUSD 18.0bnUSD 18.3bnUSD 18.5bnUSD 18.6bn+3.4%
    Discount factor0.95870.88110.80980.74420.68400.62860.57770.53100.48800.4485-
    Present valueUSD 13.2bnUSD 13.4bnUSD 12.8bnUSD 12.3bnUSD 11.7bnUSD 11.0bnUSD 10.4bnUSD 9.7bnUSD 9.0bnUSD 8.4bn-
    Present Value Of The ForecastUSD 111.9bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta1.001Reported 1.002, pulled toward 1.0 (Blume)
    Cost of equity9.13%Risk-free + beta x equity risk premium
    Cost of debt5.29%Risk-free + 40bp, the spread for a AAA rating at 10.9x interest cover. Book interest / average debt was lower, at 5.1%.
    Market capitalisationUSD 400.6bn93.1% of capital
    Total debtUSD 29.5bn6.9% of capital, book value as a proxy
    Tax rate16.4%Effective, capped at statutory
    WACC8.81%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 60.02

    55% of EV

    Forecast FCFF, final year
    USD 18.6bn
    Capex at depreciation, working capital in reinvestment
    USD 22.7bn
    Less reinvestment at g/ROIC (16.1% of NOPAT)
    USD -3.7bn
    Capitalised
    USD 19.0bn
    ROIC (reported)
    15.5%
    Terminal value, undiscounted
    USD 309.0bn
    Terminal value, discounted
    USD 138.6bn
    Enterprise value
    USD 250.5bn
    Less net debt
    USD 13.6bn
    Equity value
    USD 236.8bn

    Exit at 20.0x EBITDA

    Value per shareUSD 96.91

    72% of EV

    Terminal value, undiscounted
    USD 633.6bn
    Terminal value, discounted
    USD 284.2bn
    Enterprise value
    USD 396.0bn
    Less net debt
    USD 13.6bn
    Equity value
    USD 382.4bn

    Spread between methods: 47%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.81%81.6284.7988.8093.97100.84
    7.81%68.0469.6771.7074.2377.45
    8.81%58.1859.0160.0261.2862.85
    9.81%50.7251.0851.5452.1252.86
    10.81%44.8744.9545.1045.3045.59

    Outlined: this model. Green text: above today's price of 101.61. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year3.6%5.6%12.1%
    EBIT margin27.3%24.7%40.6%
    Discount rate-8.8%6.3%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.