This story originally appeared on Zacks
In the last trading session, VMware (VMW) closed at $123.40, recording a +0.41% move from the day before. The move outpaced the S&P 500’s daily loss of 1.42%. Meanwhile, the Dow Jones lost 0.49%, and the tech-heavy Nasdaq lost 0.47%.
Heading into the day, shares of the cloud computing company are up 8.48% over the past month, outpacing the computer and technology sector’s 4.18% loss and the S&P 500’s 0.39% gain in that time.
VMware will be looking to show strength as it nears its next earnings release. In this report, analysts expect VMware to report earnings of $1.97 per share. This would represent a year over year decline of 10.86%. Our latest consensus estimate calls for quarterly revenue of $3.52 billion, up 6.93% over the same period last year.
For the full year, our Zacks Consensus estimates forecast 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’s also important to note recent changes in analyst estimates for VMware. These reviews help show the ever-changing nature of near-term business trends. As a result, we can interpret positive rating reviews as a good sign of the company’s business outlook.
Research indicates that these discretionary revisions are directly related to the stock’s near-term price momentum. We developed Zacks Rank to take advantage of this phenomenon. Our system takes these discretionary changes into account and provides a clear and actionable rating model.
The Zacks Rank system ranges from #1 (strong buy) to #5 (strong sell). The company has a successful and externally audited track record, with the No. 1 stock generating an average annual return of over 25% since 1988. Over the past 30 days, our EPS-compliant forecast has remained stagnant. VMware currently has a Zacks rating of 2 (purchased).
Investors should also note VMware’s current valuation metrics, including a forward price-to-earnings ratio of 17.06. For comparison, its industry has an average forward P/E of 40.55, which means VMware is trading at a discount on the block.
It is also worth noting that VMW currently has a PEG ratio of 1.35. The price-earnings-growth (PEG) ratio is similar to the widely used price-to-earnings (P/E) ratio, but this metric also takes into account a company’s expected earnings growth rate. Computer – Software had an average PEG of 2.89 at yesterday’s closing price.
Computer – The software industry is part of the computer and technology sector. The industry currently has a Zacks Industry Rating of 95, placing it in the top 38% of all 250+ industries.
Zacks Industry Ranking measures the strength of our industry groups by measuring the average Zacks rating of the individual stocks within the groups. Our research shows that industries ranked 50% outperform the bottom half by a factor of 2 to 1.
To follow VMW in upcoming trading sessions, be sure to use Zacks.com.
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