Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Cisco Systems, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 8.7% to 3.3% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 68, DPO 44, DIO 53). At a 9.2% WACC with mid-year discounting, the terminal value (85% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 23.6x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $88.05 per share, suggesting CSCO is fairly valued by 6.5% at the current price of $82.68.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 15,486 | 16,382 | 17,156 | 17,716 | 18,295 | 18,752 |
| (−) Net Interest | 862 | 912 | 955 | 986 | 1,018 | 1,044 |
| (+) D&A | 719 | 744 | 822 | 833 | 886 | 908 |
| EBITDA | 17,067 | 18,037 | 18,932 | 19,535 | 20,199 | 20,704 |
| (−) Tax | 2,482 | 2,626 | 2,750 | 2,840 | 2,932 | — |
| (−) CapEx | 818 | 866 | 906 | 936 | 967 | — |
| (−) ΔWC | 1,619 | 695 | 600 | 435 | 449 | — |
| Free Cash Flow (FCF) | 12,147 | 13,851 | 14,675 | 15,324 | 15,851 | — |
| Peers' EBITDA Multiple | 23.6x | |||||
| Terminal Value | 488,826 | |||||
| WACC / Discount Rate | 9.23% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 11,622 | 12,133 | 11,769 | 11,252 | 10,655 | 314,405 |
| Enterprise Value | 371,837 | |||||
| Projection Period | 57,432 | 15.4% | ||||
| Terminal Value | 314,405 | 84.6% | ||||
| (−) Current Net Debt | 19,747 | |||||
| Equity Value | 352,090 | |||||
| (÷) Outstanding Shares | 3998M | |||||
| Fair Price | $88 | +6.5% | ||||
| WACC \ EV/EBITDA Exit Multiple | 19.6x | 21.6x | 23.6x | 25.6x | 27.6x |
|---|---|---|---|---|---|
| 7.2% | $82 | $89 | $96 | $104 | $111 |
| 8.2% | $78 | $85 | $92 | $99 | $106 |
| 9.2% | $75 | $81 | $88 | $95 | $101 |
| 10.2% | $72 | $78 | $84 | $91 | $97 |
| 11.2% | $68 | $75 | $81 | $87 | $93 |
Current price: $82.68. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.