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VMware (VMW) Earnings to Gain on Portfolio Strength in Q2

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VMware is set to release second-quarter fiscal 2019 results on Aug 23.

In the last reported quarter, VMware’s non-GAAP earnings of $1.26 per share beat the Zacks Consensus Estimate by 12 cents and increased 18.9% from the year-ago quarter.

Revenues of $2 billion also topped the consensus mark of $1.95 billion and improved 13.8% on a year-over-year basis. Strong top-line growth was primarily driven by robust performance from NSX and vSAN product line.

For second-quarter fiscal 2019, revenues are expected to be $2.145 billion, up 11% year over year. Non-GAAP earnings are anticipated to be $1.49 per share.

The Zacks Consensus Estimate for revenues and earnings currently stand at $2.15 billion and $1.49 per share, respectively.
 

Vmware, Inc. Price and EPS Surprise

Vmware, Inc. Price and EPS Surprise | Vmware, Inc. Quote

 

Let’s see how things are shaping up for this announcement.

Factors to Watch Out For

VMware outperformed the industry on a year-to-date basis. The stock has returned 51.8% compared with the industry’s rally of 33.7%.

With innovative virtualization products and cloud suit solutions, VMware continues to witness robust growth in the virtualization market, which has grown in double digits. Additionally, continuing enterprise deal wins are likely to drive growth in the to-be-reported quarter.

Moreover, the company’s dominance in software-defined data center (SDDC) along with expanding customer base in cloud, driven by partnerships with the likes of IBM and Amazon’s (AMZN - Free Report) AWS, is a positive.

Further, during the quarter, VMware and Okta (OKTA - Free Report) announced a partnership and integration between VMware Workspace ONE and the Okta Identity Cloud. The combination enables customers to easily and more securely move to the cloud.

Notably, VMware was recently positioned at the top by market research firm, Gartner in its Magic Quadrant for Unified Endpoint Management Tools.  

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

VMware has an Earnings ESP of 0.00% and a Zacks Rank #3. Consequently, the company is unlikely to deliver a positive surprise this quarter.

A Stock With Favorable Combination

Here is a stock you may also want to consider as our model shows that it has the right combination of elements to post an earnings beat.

Foot Locker (FL - Free Report) has an Earnings ESP of +3.55% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

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