Sep 24, 2020
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Is VMware’s Stock Undervalued?

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VMware check in front of VMware office in Palo Alto on February 16 2018 Palo Alto California. . [+] YICHUAN CAO/NURPHOTO Yes as per Trefis estimates VMware s stock has a good value of $163 that’s roughly 10% higher than the current market price. VMware makes money from the sale of software and services for data center management hybrid cloud computing remote access and desktop virtualization


The corporate s products are offered as hardware software and services. Its customers span across sectors that aim to transform their businesses digitally. It competes with Microsoft Nutanix Cisco among others. During this note we discuss our stock price valuation for VMware. You are able to check out our interactive dashboard analysis VMware s valuation: Expensive or Cheap? for more details and likewise modify our forecasts for the corporate s key metrics to understand how changes impact the corporate s stock price


#1. Estimating VMware s Revenues:Total Revenue increased from $8 billion in 2017 to $9 billion in 2019 and is predicted to increase by 12. 2% to $10. 1 Billion in 2020. A separate interactive dashboard analysis VMware s Revenues – How Does VMware Make Money? details our forecast for FY 2020 and 2021. #2. Deriving VMware s Net Income:Net Income grew from $1


2 billion in 2017 to $2. 4 billion in 2019 and we expect it to be around $2. 3 billion in 2020
This decline is frequently with the aid of lower margins offset by higher revenues. #3. Determining VMware s EPS:EPS went up from $2. 88 in 2017 to $5. 85 in 2019 and we expect it to be around $5


61 in 2020
The expected increase in EPS for 2019 might be attributed to raised Net Income and lower Shares outstanding. #4. Estimating VMware s Share Price: Our worth estimate of $163 for VMware s stock is based on our Detailed Valuation Model for VMWare and implies a 29. 1x P/E Multiple on expected 2020 EPS of $5


61. Our interactive dashboard captures how VMware compares with its competitors Microsoft and Cisco when it comes to Revenue and P/E multiple. PROMOTED Grads of Life BRANDVOICE | Paid Program
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