Exploring the Intrinsic Valuation of Cisco: Strategic Reasoning for Informed Decision Making

Abstract

This dissertation evaluates Cisco Systems Inc., a leading global technology company, to determine its intrinsic value and provide investment recommendations—buy, hold, or sell. Utilizing 2022 financial data and assuming an analysis date of January 1, 2023, the study employs Discounted Cash Flow (DCF) and relative valuation methods to establish a comprehensive valuation. A detailed review of valuation methodologies highlights the advantages and limitations of each, with DCF emphasized for its robustness in isolating intrinsic value, albeit with challenges in cash flow forecasting and terminal growth assumptions. Relative valuation is also explored for its efficiency, though the identification of comparable companies poses significant hurdles. The analysis incorporates an in-depth examination of Cisco’s business model to identify suitable industry peers, ensuring relevance in the relative valuation process. By integrating both approaches, this paper aims to deliver a well-rounded perspective on Cisco’s financial health and future potential, aiding investors in making informed decisions.