VMware is set to release second-quarter fiscal 2020 results on Aug 22.
The company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 4.3%.
In the last reported quarter, VMware benefited from strong top-line growth primarily driven by robust performance of NSX, VeloCloud and vSAN product lines.
For second-quarter fiscal 2020, the company anticipates revenues to be $2.425 billion, up 11.5% year over year.
The Zacks Consensus Estimate for revenues currently stands at $2.43 billion, indicating 11.6% growth from the figure reported in the year-ago quarter.
VMware projects non-GAAP earnings of $1.55 per share. The consensus mark for earnings is in line with management’s guidance and has remained steady over the past 30 days.
Let’s see how things are shaping up for this announcement.
Factors to Consider
VMware is benefiting from continued enterprise deal wins, which are expected to drive growth in the to-be-reported quarter. The company closed 16 deals worth more than $10 million in the last reported quarter.
The company’s dominance in the software-defined data center (SDDC) space along with the expanding customer base in cloud, driven by partnerships with the likes of IBM, Amazon’s (AMZN - Free Report) cloud division Amazon Web Services (AWS), Microsoft and Alibaba, is a positive.
VMware and AWS have expanded their partnership that now enables the latter to resell VMware Cloud on the platform. In the to-be-reported quarter, NHS Digital, the national information and technology partner for the U.K. health and care system, adopted VMware Cloud on AWS and made it available across the NHS.
VMware’s NSX solution has also gained significant adoption owing to strong demand for automation and cloud-native workloads for SD-WAN. Further, strong End-User Computing (EUC) license bookings, driven by Workspace ONE, are a major growth driver.
Acquisitions are also playing a key role to improve VMware’s performance. In the first quarter, the company acquired Bitnami, a leader in application packaging solutions providing the largest catalog of click-to-deploy applications and development stacks for major cloud and Kubernetes environments. The company also completed the acquisition of AetherPal.
During the to-be-reported quarter, VMware announced its plan to acquire Avi Networks, a well-known provider of multi-cloud application delivery services.
What Our Model Says
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has a good chance of beating estimates. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.
VMware has a Zacks Rank #3 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.
Stocks With a Favorable Combination
Here are some companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:
Nutanix (NTNX - Free Report) has an Earnings ESP of +4.80% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Smartsheet (SMAR - Free Report) has an Earnings ESP of +11.11% and a Zacks Rank #3.
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VMware is set to release second-quarter fiscal 2020 results on Aug 22.
The company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 4.3%.
In the last reported quarter, VMware benefited from strong top-line growth primarily driven by robust performance of NSX, VeloCloud and vSAN product lines.
For second-quarter fiscal 2020, the company anticipates revenues to be $2.425 billion, up 11.5% year over year.
The Zacks Consensus Estimate for revenues currently stands at $2.43 billion, indicating 11.6% growth from the figure reported in the year-ago quarter.
VMware projects non-GAAP earnings of $1.55 per share. The consensus mark for earnings is in line with management’s guidance and has remained steady over the past 30 days.
Let’s see how things are shaping up for this announcement.
Factors to Consider
VMware is benefiting from continued enterprise deal wins, which are expected to drive growth in the to-be-reported quarter. The company closed 16 deals worth more than $10 million in the last reported quarter.
The company’s dominance in the software-defined data center (SDDC) space along with the expanding customer base in cloud, driven by partnerships with the likes of IBM, Amazon’s (AMZN - Free Report) cloud division Amazon Web Services (AWS), Microsoft and Alibaba, is a positive.
VMware and AWS have expanded their partnership that now enables the latter to resell VMware Cloud on the platform. In the to-be-reported quarter, NHS Digital, the national information and technology partner for the U.K. health and care system, adopted VMware Cloud on AWS and made it available across the NHS.
VMware’s NSX solution has also gained significant adoption owing to strong demand for automation and cloud-native workloads for SD-WAN. Further, strong End-User Computing (EUC) license bookings, driven by Workspace ONE, are a major growth driver.
Acquisitions are also playing a key role to improve VMware’s performance. In the first quarter, the company acquired Bitnami, a leader in application packaging solutions providing the largest catalog of click-to-deploy applications and development stacks for major cloud and Kubernetes environments. The company also completed the acquisition of AetherPal.
During the to-be-reported quarter, VMware announced its plan to acquire Avi Networks, a well-known provider of multi-cloud application delivery services.
What Our Model Says
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has a good chance of beating estimates. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.
VMware has a Zacks Rank #3 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.
Stocks With a Favorable Combination
Here are some companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:
Nutanix (NTNX - Free Report) has an Earnings ESP of +4.80% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Smartsheet (SMAR - Free Report) has an Earnings ESP of +11.11% and a Zacks Rank #3.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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