Cisco bouncing back from 'silly' valuation
Posted
Oct 13 2008, 01:42 PM
by
Kim Peterson
Rating:
Cisco has long been one of the titans of tech, a solid company with plenty of room to grow. But the company has been hit hard lately amid increasing concerns about a pullback in technology spending by businesses. Last week, its valuation became "silly," according to JMP Research's Samuel Wilson.
The stock price plunged below the $17 mark last week, but today it's climbing back to $18.45. Wilson says he is confident in Cisco because it has nearly $20 billion in net cash, a dominant market position and a "fortress balance sheet," according to Barron's.
Interestingly, Wilson says he's throwing out all forward valuation methods because they're too unrelaliable, with wild swings in earnings or sales assumptions. He's going to rely only on trailing metrics for Cisco from now on. And at last week's stock price, Wilson says, the stock has a free cash yield of 10.5%.
