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

Zacks Equity Research

VMware (VMW) closed at $167.97 in the latest trading session, marking a +1.35% move from the prior day. This change outpaced the S&P 500's 0.16% gain on the day. At the same time, the Dow 0%, and the tech-heavy Nasdaq gained 0.26%.

Coming into today, shares of the cloud computing company had gained 7.36% in the past month. In that same time, the Computer and Technology sector gained 4.79%, while the S&P 500 gained 4.12%.

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.

For the full year, our Zacks Consensus Estimates are projecting earnings of $6.54 per share and revenue of $10.03 billion, which would represent changes of +3.32% and +11.74%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for VMW. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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 currently has a Zacks Rank of #3 (Hold).

Digging into valuation, VMW currently has a Forward P/E ratio of 25.35. Its industry sports an average Forward P/E of 29.77, so we one might conclude that VMW is trading at a discount comparatively.

Meanwhile, VMW's PEG ratio is currently 1.89. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Computer - Software industry currently had an average PEG ratio of 2.28 as of yesterday's close.

The Computer - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 41, which puts it in the top 17% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

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