Is Cisco Systems, Inc. (CSCO) overvalued or undervalued?
Updated Nov 10, 2026 · hand-researched model · educational, not advice
At a recent price of $98.65, Cisco Systems, Inc. (CSCO) trades 71% above TickerWorth's blended fair value of $57.76 per share — a discounted-cash-flow model cross-checked against peer multiples and asset value — meaning the market currently prices CSCO overvalued vs our estimate of what the business is intrinsically worth. Our fair value sits below the market, an implied -41.5% move to close the gap if the business performs in line with our assumptions. This is an educational model, not a price target or a recommendation — the value moves with the inputs, which you can test yourself using the WACC slider below.
One of the lenses behind that blended figure is a discounted-cash-flow model, which on its own values CSCO at about $54.40 per share. The rest of this page walks through that DCF — its assumptions, reverse-DCF and discount-rate sensitivity — because it is the auditable anchor of the blend.
The valuation discounts Cisco Systems, Inc.'s projected free cash flows at a weighted-average cost of capital (WACC) of 9.9%, with a long-run terminal growth rate of 2.5%. About 72% of the enterprise value comes from the terminal value — the portion beyond the explicit forecast window — which is typical for a stable, cash-generative business and a reminder that small changes in the discount rate or terminal growth assumption swing the intrinsic value meaningfully.
Running the DCF in reverse — solving for the growth the current price already assumes — the market is implying roughly 24.8% annual revenue growth for CSCO. Our base case instead compounds to about 6.8% a year over the same forecast, so the market is pricing in materially faster growth than our base case. The reverse-DCF is a quick sanity check: it reframes 'is this stock cheap?' as 'do I believe the growth the price requires?' rather than arguing over a single point estimate of fair value.
Sensitivity matters more than any single number. Across a reasonable band of discount-rate assumptions, CSCO's modeled DCF value ranges from about $40.97 to $81.46 per share. If that range still sits below today's price, the market is optimistic relative to the model across the whole band; if it brackets the price, the stock is roughly fairly valued on our assumptions. Use the interactive slider to see exactly where your own cost-of-capital view lands.
How to read this page: the DCF fair value is what Cisco Systems, Inc. would be worth if its cash flows grow as modeled and are discounted at the stated WACC. The assumptions table shows every input and its source; the reverse-DCF shows what the market believes; the sensitivity band shows how fragile the answer is. None of this is investment advice — it is a transparent, auditable framework for forming your own view of CSCO's intrinsic value. Figures update as new filings and prices come in.
The assumptions behind CSCO's DCF
| Input | Value | Source |
|---|---|---|
| Base-year revenue | $63,325,000,000 | Cisco FY2026 10-K (accession 0000858877-26-000132, filed 2026-09-02): us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax, FY2026 (52 weeks to 2026-07-25). +11.8% vs FY2025 $56,654M. Product $48,295M (+16%), services $15,030M (flat). By product group: Networking $34,668M (+22%), Security $8,232M (+2%), Collaboration $4,300M (+4%), Observability $1,095M (+4%). THE GROWTH IS HARDWARE: services and subscription did not grow — total ARR $32.1B was +3% and subscription is 48% of revenue (Q4 FY26 prepared remarks). CROSS-CHECK, LATEST QUARTER: Q4 FY26 revenue $17,252M, +18% YoY, product +24%, the fastest of the year — so the base year ends on its strongest quarter and Year 1 starts from an exit run-rate of ~$69B annualized before any growth. Five-year context: $49.8B (FY21), $51.6B, $57.0B, $53.8B (FY24, a -5.6% digestion year after the supply-chain backlog flushed), $56.7B, $63.3B. |
| Base EBIT margin | 24.3% | Cisco Q4 FY2026 earnings release, 8-K Ex-99.1 (accession 0000858877-26-000106, filed 2026-08-12); ties to the FY2026 10-K: GAAP operating income $15,368M / revenue $63,325M = 24.27% (us-gaap:OperatingIncomeLoss, same figure in the 10-K). This is GAAP and therefore AFTER: SBC $3,770M (5.95% of revenue), amortization of acquisition-related intangibles $1,863M (2.94% — $947M in cost of sales + $916M opex, mostly Splunk), acquisition costs $375M and restructuring $693M. Non-GAAP operating margin was 34.8%; the ~10.5pt gap is those four items. It EXCLUDES the $1,245M of other income, of which $1,409M was gains on non-marketable equity investments — not operating, not repeatable. CROSS-CHECK: Q4 FY26 GAAP margin 24.7% vs 21.0% a year earlier; FY2025 was 20.76%, FY2024 22.6%, FY2023 26.4% (before Splunk amortization started). |
| Forecast revenue growth | 15% → 7% → 5% → 4% → 4% | Assumption — TickerWorth's 5-year explicit forecast |
| Risk-free rate | 5.2% | US 10Y Treasury constant maturity (FRED DGS10): 5.24% on 2026-10-01, the latest published observation. Shared by every model in this tracker. |
| Beta | 0.99 | Yahoo Finance 5Y-monthly beta via yfinance: Published 5Y-monthly beta 0.992, used as-is (rounded to 0.99). NOT normalized. There is an argument for normalizing DOWN — Cisco's beta ran ~0.8-0.9 for most of the last decade as a mature dividend payer — but the last two years made it an AI-infrastructure stock (+57% over 12 months, a 52-week range of $66.81-$130.37), and that higher co-movement with the market is the risk an owner now actually carries. Each 0.1 of beta is worth roughly $4/share here (0.80 gives ~$62.5); the reverse DCF shows the price needs a beta near 0.21, so no plausible beta closes the gap. |
| Terminal growth | 2.5% | Assumption — house default: House default 2.5% (roughly long-run nominal GDP), kept for comparability. FLAG: this is generous relative to Cisco's own history — revenue grew only ~0.8% a year from FY2016 ($49,247M) to FY2022 ($51,557M) before the AI cycle. Kept because networking traffic now grows with AI inference and the house default is about comparability, not a forecast; 2.0% would take ~$2.8/share off. Must stay well below WACC (9.87%); 3.0% would add ~$3.2/share. |
| Diluted shares | 3,984M | Cisco Q4 FY2026 earnings release, 8-K Ex-99.1 (shares used in per-share calculation); ties to the 10-K: Q4 FY2026 weighted-average diluted shares 3,984M (FY2026 full year 3,987M; Q4 FY2025 3,992M). The count is FALLING slowly: Cisco bought back $6.1B of stock in FY2026 (~76M shares) against issuance and RSU vesting, net ~-0.2% a year. The diluted rather than the 3,942.6M outstanding figure is used because that is how this model carries SBC dilution. |
| Market price | $98.65 | Delayed quote · as of 2026-11-10 05:04 UTC |
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Most undervalued stocks (per our valuation) · Undervalued Technology stocks · All valued stocks · Interactive CSCO valuation & downloadable modelTickerWorth is an educational DCF tool, not a licensed investment adviser. Figures are estimates derived from public filings and market data and can be wrong.