Cisco Systems Reports Lower Free Cash Flow - But, Is CSCO Stock a Buy Here?

Core Insights - Cisco Systems (CSCO) reported positive free cash flow (FCF) for the latest quarter ending January 24, 2026, although it was lower than the previous year. The FCF margin remains strong, and management's guidance indicates higher earnings, leading analysts to raise target prices for CSCO stock [1][3]. Financial Performance - Cisco's fiscal Q2 revenue increased by 10.3% to $15.3 billion, while earnings per share (EPS) rose by 11% [4]. - Operating cash flow (OCF) decreased from $2.24 billion last year to $1.82 billion, representing 11.8% of quarterly revenue, down from last year's 16% OCF margin [5]. - The Q2 FCF was reported at $1.539 billion, which is 10.0% of revenue, compared to $2.03 billion last year with a 14.5% FCF margin [5]. Long-term Projections - Over the trailing 12 months, Cisco's FCF was $12.24 billion, representing 20.73% of TTM revenue, down from 23.6% the previous year. Management's higher revenue forecasts suggest potential for increased FCF over the next 12 months [6]. - Management expects revenue for the current year to range between $61.2 billion and $61.7 billion, with a midpoint of $61.45 billion, which is 8.5% higher than last year's revenue of $56.65 billion [8]. - Analysts project revenue of $61.56 billion for the year ending July 2026 and $64.93 billion for the following fiscal year, indicating a potential rise to $63.245 billion over the next 12 months, an increase of 11.64% over FY 2025 [9].