VMware recently beat earings estimates but the stock tumbled and the Zacks Rank has fallen to the lowest level. Let's take a look at why that is the case and if this stock is worth grabbing at these lower level in this Bear of the Day article.
Description
Headquartered in Palo Alto, CA, VMware Inc. is a leading provider of virtualization solutions. Its product portfolio addresses the needs of clients, both individuals and organizations. The company specializes in providing virtualization platforms, virtual infrastructure automation and virtual infrastructure management.
VMware's suite of virtualization solutions addresses a range of complex IT problems, including infrastructure optimization, business continuity, software lifecycle management and desktop management.
Recent Earnings
I see the company posted a beat recently -- and it was a beat a raise, yet the stock slid.
I see a 7 cent beat which translates into a 4.9% positive earnings surprise. This was the fourth beat in a row, and they are all around the same size. To me that is a positive.
Estimates
This is where the Zacks Rank really pays off. I see estimates for this quarter and next quarter coming in a bit. A 3 cent drop in this quarter and a 7 cent drop next quarter.
This year has a slight increase, but that was due to the beat. Next year, however, saw a drop from $7.31 to $6.99.
That is a big move lower, but the company is still on very solid ground.
Valuation
22x forward earnings is not that expensive especially when you have 11% topline growth. 11x price to book is pretty high, and so is the 6x price to sales, but keep in mind this is a tech stock that keeps growing.
At the end of the day, the move lower in price does look like a buyable dip to me, but you need the market to continue to remain firm for this investment to work out.
Chart
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A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
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Bear Of The Day: VMware (VMW)
VMware recently beat earings estimates but the stock tumbled and the Zacks Rank has fallen to the lowest level. Let's take a look at why that is the case and if this stock is worth grabbing at these lower level in this Bear of the Day article.
Description
Headquartered in Palo Alto, CA, VMware Inc. is a leading provider of virtualization solutions. Its product portfolio addresses the needs of clients, both individuals and organizations. The company specializes in providing virtualization platforms, virtual infrastructure automation and virtual infrastructure management.
VMware's suite of virtualization solutions addresses a range of complex IT problems, including infrastructure optimization, business continuity, software lifecycle management and desktop management.
Recent Earnings
I see the company posted a beat recently -- and it was a beat a raise, yet the stock slid.
I see a 7 cent beat which translates into a 4.9% positive earnings surprise. This was the fourth beat in a row, and they are all around the same size. To me that is a positive.
Estimates
This is where the Zacks Rank really pays off. I see estimates for this quarter and next quarter coming in a bit. A 3 cent drop in this quarter and a 7 cent drop next quarter.
This year has a slight increase, but that was due to the beat. Next year, however, saw a drop from $7.31 to $6.99.
That is a big move lower, but the company is still on very solid ground.
Valuation
22x forward earnings is not that expensive especially when you have 11% topline growth. 11x price to book is pretty high, and so is the 6x price to sales, but keep in mind this is a tech stock that keeps growing.
At the end of the day, the move lower in price does look like a buyable dip to me, but you need the market to continue to remain firm for this investment to work out.
Chart
VMware, Inc. Price and Consensus
VMware, Inc. price-consensus-chart | VMware, Inc. Quote
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>