Here in this article I will analyze Cisco systems company stock and see how much it will worth in 5 years of investment.
Cisco Systems founded in 1984 and its well known company and industry leader in communication technology that developed hardware and software. Its products cover all the world, and its technology integrated in all networks.
Cisco EPS had increased from year 2017 to 2022, from 1.98$ until it reached 2.82$ with compound growth rate of 7.33%, except for year 2018 where Cisco EPS dropped to 0.02$. But since Cisco get back to track and maintain higher EPS since 2019 until 2022, we will consider year 2018 as an anomaly and discard its EPS.
Now we have Cisco EPS growth rate, we will project the EPS of Cisco Systems to see how it will be in the coming five years, by using the following formula:
- Where PV = Cisco EPS in year 2022 = 2.82$
- i = growth rate of CAT EPS estimated above = 7.33%%
- n = years of investment = 5 years in 2027
By plug in the data that we mentioned above in the formula, we end up with projected EPS for Cisco in 2027 which will be 4.02$.
Now that we have Cisco projected EPS for year 2027 which is 4.02$, all what we have to do is to find the lowest (P/E) ratio for Cisco in the last 5 years, and as we said in the previous analysis we are looing for the lowest (P/E) ratio because we are conservative investors.
The lowest (P/E) ratio for Cisco systems for the last five years was 17.84 which was in year 2020.
Now all what we have to do is to multiply the (P/E) ratio that mentioned above to the projected Cisco EPS for year 2027 to find the price of Cisco Systems stock in year 2027 which is as following:
Cisco Systems’ Stock price in 2027 = (4.02)*(17.84)= 71.72$
As of writing this article Cisco is trading with 48.46$ a share, which means that if I invested 10,000$ in its stock today I am expecting an increase in my investment for 47.99% or 14,799.83$ in 2027.