Cisco Systems (CSCO) has done very well in the last few years, and its stock has outperformed the market by a significant margin. In fact, since the beginning of 2014, CSCO’s stock has gained 52.5% while the S&P index has increased only 28.1% in the same period. What’s more, the company has a compelling valuation and is paying a generous dividend yielding 3.39% after increasing its quarterly dividend by 12% to $0.29 in February 2017.

I see high long-term growth prospects for the company. Cisco is continuing to focus on earnings growth which is driven by its plan to shift toward software and subscription-based product & services model.

Latest Quarter Results

On February 14, Cisco reported its second-quarter fiscal 2017 financial results, which beat EPS expectations by $0.01 (1.8%). Cisco has shown earnings per share surprise in all its last fourteen quarters, as shown in the table below.

During its second fiscal quarter, the company returned about $2.3 billion to shareholders by $1.3 billion in dividend payments and $1.0 billion in share repurchases.

In the report, Chuck Robbins, Cisco CEO, said:

“We are pleased with the quarter and the continued customer momentum as we help them drive security, automation and intelligence across the network and into the cloud. This quarter we announced our intent to acquire AppDynamics which, combined with Cisco’s networking analytics, will provide customers with unprecedented insights into business performance. We will remain focused on accelerating innovation across our portfolio as we continue to deliver value to customers and shareholders.”

Cisco Stock Performance

CSCO’s stock has outperformed the market in the last few years. Since the beginning of the year, CSCO’s stock is up 13.2% while the S&P 500 Index has increased 5.8%, and the Nasdaq Composite Index has gained 8.4%. Moreover, since the beginning of 2014, CSCO’s stock has gained 52.5%. In this period, the S&P 500 Index has increased 28.1%, and the Nasdaq Composite Index has risen 39.7%. According to TipRanks, the average target price of the top analysts is at $35.89, representing an upside of 5% from its March 7 close price of $34.20, however, in my opinion, shares could go much higher.