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VMware (VMW) Gains As Market Dips: What You Should Know

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VMware closed at $120.98 in the latest trading session, marking a +0.4% move from the prior day. This change outpaced the S&P 500's 1.94% loss on the day. Meanwhile, the Dow lost 1.07%, and the Nasdaq, a tech-heavy index, lost 0.39%.

Prior to today's trading, shares of the cloud computing company had gained 3.3% over the past month. This has outpaced the Computer and Technology sector's gain of 2.77% and lagged the S&P 500's gain of 5.72% in that time.

Wall Street will be looking for positivity from VMware as it approaches its next earnings report date. On that day, VMware is projected to report earnings of $1.97 per share, which would represent a year-over-year decline of 10.86%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales 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 typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. VMware is currently sporting a Zacks Rank of #2 (Buy).

Digging into valuation, VMware currently has a Forward P/E ratio of 16.73. For comparison, its industry has an average Forward P/E of 40.79, which means VMware is trading at a discount to the group.

Also, we should mention that VMW has a PEG ratio of 1.32. 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. VMW's industry had an average PEG ratio of 2.9 as of yesterday's close.

The Computer - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 100, putting it in the top 40% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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

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