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VMware (VMW) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

VMware (VMW) closed the most recent trading day at $161.22, moving +1.07% from the previous trading session. This change outpaced the S&P 500's 0.33% gain on the day. Elsewhere, the Dow gained 0.43%, while the tech-heavy Nasdaq added 0.33%.

Heading into today, shares of the cloud computing company had gained 3.72% over the past month, outpacing the Computer and Technology sector's gain of 3.65% and the S&P 500's gain of 2.66% in that time.

VMW will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $1.42, down 8.97% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $2.40 billion, up 9.24% from the prior-year quarter.

VMW's full-year Zacks Consensus Estimates are calling for earnings of $6.54 per share and revenue of $10.03 billion. These results would represent year-over-year changes of +3.32% and +11.74%, respectively.

It is also important to note the recent changes to analyst estimates for VMW. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. VMW is currently a Zacks Rank #3 (Hold).

In terms of valuation, VMW is currently trading at a Forward P/E ratio of 24.4. This valuation marks a discount compared to its industry's average Forward P/E of 28.68.

Meanwhile, VMW's PEG ratio is currently 1.82. 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. Computer - Software stocks are, on average, holding a PEG ratio of 2.18 based on yesterday's closing prices.

The Computer - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 71, putting it in the top 28% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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