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Will VMware's (VMW) Q2 Earnings Surprise Estimates? - Analyst Blog

VMware, Inc. VMW is set to report second-quarter 2015 results on Jul 21. Last quarter, the company posted a 12.28% positive earnings surprise. The company has posted an average positive earnings surprise of 8.97% over the past four quarters. Let’s see how things are shaping up for this announcement.

Factors at Play

VMware remains one of the leading companies in the virtualization and cloud computing market. The company’s innovative product pipeline, strategic partnerships with the likes of Hewlett-Packard HPQ, continuous contract wins and robust international sales are expected to drive overall results.

Additionally, acquisitions like Desktone, AirWatch and CloudVolumes have significantly expanded VMware’s product portfolio.

However, sluggish IT spending and stiff competition from the likes of Microsoft MSFT and Citrix Systems remain headwinds. Moreover, VMware’s continued investment in the emerging markets, product innovation and acquisitions are expected to weigh on margins in the near term.

Earnings Whispers?

Our proven model does not conclusively show that VMware is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: VMware has an Earnings ESP of 0.00% as both the Most Accurate and the Zacks Consensus Estimate stands at 66 cents.

Zacks Rank: VMware currently has a Zacks Rank #2 (Buy). Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stocks to Consider

Investors may consider the following stocks which, according to our model, have the right combination of elements to post an earnings beat this quarter:

Apple Inc. AAPL, with an Earnings ESP of +5.03% and a Zacks Rank #2 (Buy).

KeyCorp KEY, with an Earnings ESP of +3.57% and a Zacks Rank #2.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report>>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
VMWARE INC-A (VMW): Free Stock Analysis Report
 
KEYCORP NEW (KEY): Free Stock Analysis Report
 
APPLE INC (AAPL): Free Stock Analysis Report
 
MICROSOFT CORP (MSFT): Free Stock Analysis Report
 
HEWLETT PACKARD (HPQ): Free Stock Analysis Report
 
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