VMware Q3 Earnings Preview: VMW Up 19.3% Since Last Report


VMware, Inc. (NYSE:VMW) is scheduled to report Q3 earnings results on November 26, 2019 at 01:30 PM PST. You can find more information about the conference call here.

The company is expected to report earnings of $1.42/share on revenue of $2.405 billion. The consensus earnings per share (EPS) of $1.42/share is based on a poll of 29 analysts and represents a decline of -9.0% over the same quarter last year when the company reported earnings of $1.56/share.

The revenue forecast of $2.405 billion based on a poll of 24 analysts implies a year-over-year (YoY) growth of 9.3%. Last year the company reported $2.2 billion in revenue for the quarter.

Expected to report EPS decline of -$0.14/share for Q3, 2019
Metric Expected Prior Year YoY Change
Revenue $2,405.20 $2,200.00 9.3%
EPS $1.42 $1.56 -9.0%

Earnings Call Trends

Management has a perfect record over the last 8 tracked quarters of exceeding earnings guidance. What are your expectations from VMware for earnings this quarter? Let us know in the comments!

Analyst Expected vs Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $1.55 $1.60 3.2% Beat
Q1, 2020 $1.27 $1.32 3.9% Beat
Q4, 2019 $1.87 $1.98 5.9% Beat
Q3, 2019 $1.50 $1.56 4.0% Beat
Q2, 2019 $1.49 $1.54 3.4% Beat
Q1, 2019 $1.14 $1.26 10.5% Beat
Q4, 2018 $1.62 $1.68 3.7% Beat
Q3, 2018 $1.27 $1.34 5.5% Beat

One question we always consider here at the Bankers’ Tribune is how important are earnings reports to VMware’s stock price performance? It’s more important for some companies than for others.

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending August 2, 2019, the stock price reacted by falling by -9.9%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-08-22 $148.09 $133.42 -9.9% Decline
2019-05-30 $191.27 $176.98 -7.5% Decline
2019-02-28 $176.01 $178.20 1.2% Increase
2018-11-29 $159.76 $167.34 4.7% Increase

Fundamentals And Technical Analysis

VMware is currently trading at $168.69/share, up 1.7% for the day. The company is trading at approximately 82% of its 52-week high of $206.80/share. The company’s stock price is up 26.4% since the last earnings report and up 0.8% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 56.66 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

The current share price implies a price-to-earnings (P/E) multiple of 10.8x and a forward P/E multiple of 24.9x.

VMware’s current share price also implies a price-to-book (P/B) multiple of 13.0x. The following table summarizes some other key fundamental ratios:

Data as of November 25, 2019
Metric Value
Last Fiscal Period FY2020.Q2
Period End Date August 2, 2019
Stock Price (Current) $168.69
P/E Ratio 10.8x
P/E Ratio (Fwd) 24.9x
PEG Ratio 2.2
Total Debt to Capital (%) 6.8%
Levered Free Cash Flow $3.471 billion
Enterprise Value / EBITDA 27.7x

Source: Finbox

Company Profile: VMware, Inc.

VMware, Inc. is a large-cap stock with a market capitalization of $67.776 billion and a total enterprise value of $69.809 billion. The company operates in the Information Technology sector and Software industry.

VMware, Inc. provides software in the areas of hybrid cloud, multi-cloud, modern applications, networking and security, and digital workspaces in the United States and internationally.

The company offers compute products, including VMware vSphere, a data center platform, which enables users to deploy hypervisor, a layer of software that resides between the operating system and system hardware to enable compute virtualization; and cloud management products for businesses with automated operation, programmable provisioning, and application monitoring solutions. It also provides networking and security products and services that enable customers to connect, secure, and operate their network consistently within and across the data center, cloud, and network edges; and storage and availability products, including data storage and protection options.

In addition, the company offers VMware Cloud Foundation, a platform that brings together its compute, storage, and networking technologies into an integrated stack and delivers enterprise-ready cloud infrastructure for private and public clouds; and VMware Pulse IoT Center, an Internet of Things device management and monitoring solution. Further, it provides hybrid cloud computing solutions, such as VMware Cloud Provider Program, VMware Cloud Foundation, and VMware Cloud Services; and end-user computing solutions, such as Workspace ONE that delivers and manages any application on any device by integrating access control, application management, and multi-platform endpoint management.

The company sells its products through distributors, resellers, system vendors, and systems integrators. VMware, Inc. has strategic alliances with Amazon Web Services to build and deliver an integrated hybrid solution; and Pivotal.

VMware, Inc. was incorporated in 1998 and is headquartered in Palo Alto, California. VMware, Inc. is a subsidiary of Dell Technologies Inc.

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