Cisco System Inc. (NASDAQ:CSCO) shares are experiencing sustainable growth in revenue and earnings, as well as increasing returns. All of this put together is helping to boost trader’s confidence in the company. Its stock price rose 32% in the last twelve months, and the stock is up 50% in the previous three years.
Cisco System Inc. shares are currently trading around the highest level that they have been in the last eighteen years. Furthermore, Wall Street analysts are seeing even greater upside in Cisco shares. Baird’s Jayson Noland issued a price target of $51 for CSCO stock with a ‘Buy’ rating, citing improving financial numbers and cash returns for investors.
Cash Returns Boosts Traders Confidence
Investors always love to buy and hold stocks that offer steady cash returns. In the case of Cisco, it has a history of making considerable increases in cash returns for investors in the form of dividends and share buybacks. The company has increased its dividends at a significant rate over the last seven consecutive years.
Additionally, the latest dividend increase of 13.8% helped to boost trader’s confidence in Cisco. The company also returned $6 billion to investors through share buybacks in the most recent quarter. Moreover, the company is planning to repurchase $25 billion of common stock in the following quarters.
Sustainable Financial Growth Adds to Trader Sentiments
Cisco System generated year-over-year revenue growth of 4% in the latest quarter while its earnings per share grew 12% from this time last year. Cisco’s cash flows are offering a complete cover to dividend payments. The company generated $9 billion in operating cash flows compared to dividend payments of $1.6 billion and share buybacks of $6 billion. Cisco expects to make similar growth in the following quarter, thanks to its investments in growth opportunities along with stable demand for its products.
Kelly Kramer, CFO of Cisco says, “Our investment in innovation and continued execution are paying off. We saw broad-based strength across our portfolio while continuing to shift our business model and deliver value for shareholders.”
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