Cisco Stock Turning Around Faster Than Company’s Results; Other Tech Giants Growing Faster

Cisco Systems (CSCO) CEO John Chambers may be right in saying that the company's recent restructuring is starting to pay off, but investors are paying up like it already has.

The company reported this week a strong year-over-year jump of 43.5% in net income in its fiscal second quarter plus a 24% gain sequentially. But Cisco lags industry heavyweights Intel (INTC), Apple (AAPL) and Google (GOOG) in net income growth.

Cisco Systems Net Income Chart by YCharts

Cisco’s revenue for the quarter rose 11% rise to $11.5 billion. The company's two main lines, switching and routers, both had an 8% gain, helping to underscore that the company has refocused itself on its core products after taking a spin through the woods over the past several quarters.

But here again, it trails most of the big guys in revenue growth.

Cisco Systems Revenues Chart by YCharts

One place where Cisco is near the top: valuation. Only Google is more expensive than Cisco, PE-wise, among this group.

Cisco Systems PE Ratio Chart by YCharts

Could it be that investors and YCharts Pro both see the same thing: According to YCharts, Cisco is almost 24% undervalued based on an historical valuation. Maybe so, but it has a long way to go.

Cisco Systems Stock Chart by YCharts

Michael McHugh is an editor for the YCharts Pro Investor Service which includes professional stock charts, stock ratings, stock screener and portfolio strategies.