In the latest trading session, VMware (VMW) closed at $123.40, marking a +0.41% move from the previous day. This move outpaced the S&P 500’s daily loss of 1.42%. At the same time, the Dow lost 0.49%, and the tech-heavy Nasdaq lost 0.47%.
Heading into today, shares of the cloud computing company had gained 8.48% over the past month, outpacing the Computer and Technology sector’s loss of 4.18% and the S&P 500’s gain of 0.39% in that time.
VMware will be looking to display strength as it nears its next earnings release. In that report, analysts expect VMware to post earnings of $1.97 per share. This would mark a year-over-year decline of 10.86%. Our most recent consensus estimate is calling for quarterly revenue of $3.52 billion, up 6.93% from the year-ago period.
For the full year, our Zacks Consensus Estimates are projecting earnings of $7.20 per share and revenue of $12.84 billion, which would represent changes of 0% and +9.12%, respectively, from the prior year.
It is also important to note the recent changes to analyst estimates for VMware. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company’s business outlook.
Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.
The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. VMware is currently sporting a Zacks Rank of #2 (Buy).
Investors should also note VMware’s current valuation metrics, including its Forward P/E ratio of 17.06. For comparison, its industry has an average Forward P/E of 40.55, which means VMware is trading at a discount to the group.
It is also worth noting that VMW currently has a PEG ratio of 1.35. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company’s expected earnings growth rate into account. The Computer – Software was holding an average PEG ratio of 2.89 at yesterday’s closing price.
The Computer – Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 95, which puts it in the top 38% of all 250+ industries.
The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
To follow VMW in the coming trading sessions, be sure to utilize Zacks.com.
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VMware, Inc. (VMW): Free Stock Analysis Report
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