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VMware (VMW) earnings: limited upside for the highly valued stock

5:08 pm ET, 27 Nov 2018

VMware, Inc. (VMW) shares are trading at $152.75, down -0.75%.  The company is announcing its quarterly earnings results on Thursday after the market close.  What's driving VMware stock price?  What's VMware stock price forecast?

VMware provides compute, cloud, mobility, and security infrastructure software to businesses.  Lately, the stock has performed well: it generated a return of 24% in the past year. The company acquired Heptio, a startup founded by the co-founders of Kubernetes.

Investors are showing interest in the company because the company benefits from the cloud computing boom.  On the other hand, few bearish investors worry about Michael Dell's ownership (Dell may still want to combine with VMware in the future).  Last quarter’s revenue rose 14% to $2.17 billion and earnings per share came at $1.54 compared to $1.35 for the same period last year.

Third-quarter results will be released after market close on November 29, 2018.  Analysts expect the company to earn $1.50 per share on revenue of $2.17 billion. The company beat analysts’ estimates in the previous four quarters.

What is the sentiment towards the VMW stock? Our technical analysis shows that: 

  • The stock short-term sentiment (next 30 days) is trending positive;
  • The mid-term sentiment (3-6 months) is trending positive;
  • The long-term sentiment (9-12 months) is trending positive. 

Over the last month, Vmware, Inc. (VMW) returned +5.83%.

Vmware, Inc. (VMW) short share of float is 10.49%. The stock is much more frequently shorted than the average industry, sector or S&P 500 stock.

Vmware, Inc. (VMW) average analyst price target ($166.15) is 5.82% above its current price ($157.01).

For the latest price and information on Vmware, Inc., please visit Finstead and search for "VMW price" or "VMW news".

VMWare: Is Hybrid Cloud Growth Sustainable?

4:30 am ET, 04 Dec 2017

VMWare

VMware posted another strong quarter, beating investors' expectations on the top and bottom lines.

The main driver of performance is solid demand and execution across all regions. What was particularly surprising was continued strength in license revenue.  The Company issued 10% top-line growth guidance for fiscal 2019, which points to a strong adoption of hybrid IT architectures instead of a pure cloud approach. 

Total revenue came in at $1.98 billion, up 11% year over year and 4% sequentially. License revenue grew 14% year over year with its second consecutive quarter of double-digit growth. Software maintenance revenue grew 8% year over year and professional services grew 20% year over year. 

Management noted a material tailwind from its recently signed $100 million deal with DXC (an IT managed services provider). 

Geographically, all regions contributed to the growth, especially EMEA. Adjusted gross margin expanded about 72 basis points year over year to 88%, while adjusted operating margin increased by approximately 170 basis points year over year to 34.9%. 

VMware guided for further adjusted operating margin expansion in the next quarter to 36.9%. However, the firm is planning to invest in business expansion, which was reflected in a weaker fiscal 2019 adjusted operating margin guidance of 32.5%.

Over the last year, VMW has returned +59.42%. This return is higher than Technology sector (24.17%), Technical & System Software industry (42.37%), S&P 500 (20.59%) returns.

VMW price target upside (measured as a difference between average analyst price target and current stock price) is -3.64% (visit Finbot and type VMW upside).

Vmware, Inc. (VMW) Stock Guide

Updated at: 7:20 pm ET, 18 Sep 2020

Before we start: if you're looking for VMW stock price, you can quickly find it out by visiting Finny and typing "VMW quote". If you're looking for a quick scoop on VMW stock (chart, price target, market cap, news and buy or sell analysis), go to Finny and look for "VMW". You'll get all this info in one place. Or you can just type "VMW news" to get the latest stock news.

Looking to buy or sell Vmware, Inc. (VMW)? Interested in getting the full scoop on VMW, including earnings and dividends, stock forecast, buy or sell analysis and key stats? If so, you came to the right place.

In this VMW stock guide, we'll address key questions about VMW, above and beyond what you can find on Yahoo Finance, Zacks, MarketWatch or Morningstar.

Here is what you'll be able to find in this guide:

Earnings and Dividends: earnings, earnings date, dividend rate and dividend yield;
Analyst Predictions: stock forecast and analyst ratings;
Analysis: Finny Score and buy or sell analysis;
Key Stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio, industry, sector, and number of employees.

And here is the list of questions we'll answer:
1. What are VMW earnings?
2. What is VMW stock forecast (i.e., prediction)?
3. VMW buy or sell? What is VMW Finny Score?
4. What are the reasons to buy VMW? Why should I buy VMW stock?
5. What are the reasons to sell VMW? Why should I sell VMW stock?
6. What are VMW key stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

So let's start. Scroll down to the question that interests you the most.

Earnings and Dividends

1. What are VMW earnings?

VMW trailing 12-month earnings per share (EPS) is $3.69.

Analyst Predictions

2. What is VMW stock forecast (i.e., prediction)?

Based on VMW analyst price targets, VMW stock forecast is $174.97 (for a year from now). That means the average analyst price target for VMW stock is $174.97. The prediction is based on 36 analyst estimates.

The low price target for VMW is $149.00, while the high price target is $200.00.

VMW analyst rating is Buy.

Analysis

3. VMW buy or sell? What is VMW Finny Score?

#{finnyScore:80}Our quantitative analysis shows 8 reasons to buy and 2 reasons to sell VMW, resulting in Finny Score of 80.

4. What are the reasons to buy VMW? Why should I buy VMW stock?

Here are the reasons to buy VMW stock:

  • Large enterprise customers, especially those in regulated industries, may be unlikely to shift their data center workloads to the cloud and will instead continue to rely on VMware for server virtualization software.
  • Growth in network and storage virtualization may more than make up for slowing growth in the core server virtualization market. VMWare follows a “one cloud, any application, any device” product strategy.
  • Enterprise mobility management and desktop virtualization may provide additional channels of top-line growth for VMware.
  • VMware's overall outperformance in the past years can be attributed to its innovative product development, strategic partnerships and robust sales in international markets.
  • The demand for virtualization and hybrid cloud solutions is still on the upside, which strengthened VMWare's position.
  • Amazon, Microsoft, and Google have adopted VMWare virtualization solutions, instead of developing their own, because of the Company's large on-prem installed base and flexibility in partnering.
  • An integrated Software Defined Data Center (SDDC) platform known as VMware Cloud Foundation provides customers with enterprise-ready cloud infrastructure for both private and public cloud.
  • The acquisition of Desktone and Airwatch helped diversify VMWare’s product portfolio and fortified its position on the market.
  • A rising demand for micro-segmentation security solutions led to VMWare’s 100% year-over-year revenue growth in the security space.
  • VMW quarterly revenue growth was 17.90%, higher than the industry and sector average revenue growth (1.70% and 0.89%, respectively). See VMW revenue growth chart.
  • VMW profitability is improving. The YoY profit margin change was 8.81 percentage points. See VMW profitability chart.
  • VMW forward P/E ratio is 19.25, which is low compared to its industry peers’ P/E ratios. See VMW forward P/E ratio chart.
  • VMW Price/Sales ratio is 5.24, which is low compared to its industry peers’ P/S ratios. See VMW forward Price/Sales ratio chart.
  • VMW average analyst rating is Buy. See VMW analyst rating chart.
  • VMW average analyst price target ($174.97) is above its current price ($141.19). See VMW price target chart.
  • VMW cash to debt ratio is 0.65, higher than the average industry (0.19) and sector (0.17) cash to debt ratio. See VMW cash to debt chart.
  • VMW Enterprise Value/Revenue multiple is 5.58, which is low compared to its industry peers’ Enterprise Value/Revenue multiples. See VMW Enterprise Value/Revenue chart.

5. What are the reasons to sell VMW? Why should I sell VMW stock?

Let's look at the reasons to sell VMW stock (i.e., the bear case):

  • Server virtualization software demand faces the persistent threat of workloads being shifted to public cloud providers, such as Amazon Web Services.
  • Existing opportunities in the server virtualization space are with smaller enterprises, where VMWare faces tougher competition. Stiff competition from Microsoft, Citrix Systems, and Red Hat in this customer segment may lead to decreased revenue and profit margins.
  • OpenStack deployments loom as a competitive threat to VMWare, and the firm could potentially lose share with some large enterprise customers.
  • VMW short share of float is 11.33%. The stock is much more frequently shorted than the average industry, sector or S&P 500 stock. See VMW short share of float chart.
  • VMW short interest (days to cover the shorts) ratio is 6.83. The stock garners more short interest than the average industry, sector or S&P 500 stock. See VMW short interest ratio chart.

Key Stats

6. What are VMW key stats : revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

Let's look at the key statistics for VMW:

Metrics VMW
Price $149.09
Average Price Target / Upside $174.97 / 17.36%
Average Analyst Rating Buy
Forward Dividend Yield 0.00%
Industry Software - Infrastructure
Sector Technology
Number of Employees 21,700
Market Cap $65.4B
Forward P/E Ratio 21.24
Price/Book Ratio 5.77
Revenue (TTM) $11.34B
YoY Quarterly Revenue Growth 9.20%
Profit Margin 13.78%

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