Vmware Inc (VMW) Stock Fundamental Analysis
NYSE:VMW - New York Stock Exchange, Inc. - US9285634021 - Common Stock - Currency: USD
We assign a fundamental rating of 5 out of 10 to VMW. VMW was compared to 282 industry peers in the Software industry. While VMW has a great profitability rating, there are quite some concerns on its financial health. VMW has a correct valuation and a medium growth rate.
1. Profitability
1.1 Basic Checks
In the past year VMW was profitable.
VMW had a positive operating cash flow in the past year.
In the past 5 years VMW has always been profitable.
In the past 5 years VMW always reported a positive cash flow from operatings.
1.2 Ratios
VMW has a better Return On Assets (4.43%) than 82.92% of its industry peers.
With an excellent Return On Equity value of 55.99%, VMW belongs to the best of the industry, outperforming 97.86% of the companies in the same industry.
VMW has a better Return On Invested Capital (7.86%) than 85.05% of its industry peers.
VMW had an Average Return On Invested Capital over the past 3 years of 9.40%. This is below the industry average of 12.26%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.43% | ||
| ROE | 55.99% | ||
| ROIC | 7.86% |
ROA(3y)5.88%
ROA(5y)10.66%
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)9.4%
ROIC(5y)10.41%
1.3 Margins
With an excellent Profit Margin value of 10.48%, VMW belongs to the best of the industry, outperforming 84.70% of the companies in the same industry.
In the last couple of years the Profit Margin of VMW has grown nicely.
With an excellent Operating Margin value of 14.00%, VMW belongs to the best of the industry, outperforming 84.70% of the companies in the same industry.
VMW's Operating Margin has declined in the last couple of years.
Looking at the Gross Margin, with a value of 81.19%, VMW belongs to the top of the industry, outperforming 86.83% of the companies in the same industry.
VMW's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 14% | ||
| PM (TTM) | 10.48% | ||
| GM | 81.19% |
OM growth 3Y2.65%
OM growth 5Y-7.92%
PM growth 3Y-45.05%
PM growth 5Y3.26%
GM growth 3Y-0.79%
GM growth 5Y-0.97%
2. Health
2.1 Basic Checks
VMW has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
Compared to 1 year ago, VMW has more shares outstanding
The number of shares outstanding for VMW has been increased compared to 5 years ago.
The debt/assets ratio for VMW has been reduced compared to a year ago.
2.2 Solvency
An Altman-Z score of 1.85 indicates that VMW is not a great score, but indicates only limited risk for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 1.85, VMW is in line with its industry, outperforming 48.40% of the companies in the same industry.
VMW has a debt to FCF ratio of 2.25. This is a good value and a sign of high solvency as VMW would need 2.25 years to pay back of all of its debts.
VMW's Debt to FCF ratio of 2.25 is fine compared to the rest of the industry. VMW outperforms 73.67% of its industry peers.
A Debt/Equity ratio of 3.73 is on the high side and indicates that VMW has dependencies on debt financing.
VMW's Debt to Equity ratio of 3.73 is on the low side compared to the rest of the industry. VMW is outperformed by 87.19% of its industry peers.
Even though the debt/equity ratio score it not favorable for VMW, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 3.73 | ||
| Debt/FCF | 2.25 | ||
| Altman-Z | 1.85 |
ROIC/WACC0.77
WACC10.18%
2.3 Liquidity
A Current Ratio of 0.87 indicates that VMW may have some problems paying its short term obligations.
With a Current ratio value of 0.87, VMW is not doing good in the industry: 82.56% of the companies in the same industry are doing better.
A Quick Ratio of 0.87 indicates that VMW may have some problems paying its short term obligations.
VMW's Quick ratio of 0.87 is on the low side compared to the rest of the industry. VMW is outperformed by 81.49% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.87 | ||
| Quick Ratio | 0.87 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 3.90% over the past year.
The Earnings Per Share has been growing slightly by 4.63% on average over the past years.
VMW shows a small growth in Revenue. In the last year, the Revenue has grown by 3.56%.
VMW shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 11.17% yearly.
EPS 1Y (TTM)3.9%
EPS 3Y0.31%
EPS 5Y4.63%
EPS Q2Q%11.59%
Revenue 1Y (TTM)3.56%
Revenue growth 3Y7.28%
Revenue growth 5Y11.17%
Sales Q2Q%2.16%
3.2 Future
VMW is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 7.04% yearly.
Based on estimates for the next years, VMW will show a quite strong growth in Revenue. The Revenue will grow by 8.40% on average per year.
EPS Next Y9.9%
EPS Next 2Y12.07%
EPS Next 3Y8.72%
EPS Next 5Y7.04%
Revenue Next Year4.52%
Revenue Next 2Y5.39%
Revenue Next 3Y5.55%
Revenue Next 5Y8.4%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
VMW is valuated rather expensively with a Price/Earnings ratio of 20.59.
85.77% of the companies in the same industry are more expensive than VMW, based on the Price/Earnings ratio.
VMW's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 27.21.
A Price/Forward Earnings ratio of 17.40 indicates a rather expensive valuation of VMW.
Based on the Price/Forward Earnings ratio, VMW is valued cheaply inside the industry as 85.41% of the companies are valued more expensively.
When comparing the Price/Forward Earnings ratio of VMW to the average of the S&P500 Index (21.70), we can say VMW is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.59 | ||
| Fwd PE | 17.4 |
4.2 Price Multiples
85.41% of the companies in the same industry are more expensive than VMW, based on the Enterprise Value to EBITDA ratio.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of VMW indicates a rather cheap valuation: VMW is cheaper than 92.53% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 13.2 | ||
| EV/EBITDA | 20.29 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
VMW has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)2.08
PEG (5Y)4.45
EPS Next 2Y12.07%
EPS Next 3Y8.72%
5. Dividend
5.1 Amount
No dividends for VMW!.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
142.48
-7.43 (-4.96%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners0.21%
Inst Owner Change0%
Ins Owners0.31%
Ins Owner Change0%
Market Cap61.52B
Analysts53.33
Price Target169.22 (18.77%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
Yearly Dividend0
Dividend Growth(5Y)N/A
DP0%
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)0.18%
Min EPS beat(2)-5.43%
Max EPS beat(2)5.79%
EPS beat(4)2
Avg EPS beat(4)0.57%
Min EPS beat(4)-7.68%
Max EPS beat(4)9.61%
EPS beat(8)N/A
Avg EPS beat(8)N/A
EPS beat(12)N/A
Avg EPS beat(12)N/A
EPS beat(16)N/A
Avg EPS beat(16)N/A
Revenue beat(2)0
Avg Revenue beat(2)-2.31%
Min Revenue beat(2)-2.35%
Max Revenue beat(2)-2.27%
Revenue beat(4)1
Avg Revenue beat(4)-2.07%
Min Revenue beat(4)-5%
Max Revenue beat(4)1.34%
Revenue beat(8)N/A
Avg Revenue beat(8)N/A
Revenue beat(12)N/A
Avg Revenue beat(12)N/A
Revenue beat(16)N/A
Avg Revenue beat(16)N/A
PT rev (1m)0%
PT rev (3m)9.94%
EPS NQ rev (1m)0%
EPS NQ rev (3m)5.95%
EPS NY rev (1m)0%
EPS NY rev (3m)2.55%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-0.35%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-0.66%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.59 | ||
| Fwd PE | 17.4 | ||
| P/S | 4.52 | ||
| P/FCF | 13.2 | ||
| P/OCF | 12.08 | ||
| P/B | 24.15 | ||
| P/tB | N/A | ||
| EV/EBITDA | 20.29 |
EPS(TTM)6.92
EY4.86%
EPS(NY)8.19
Fwd EY5.75%
FCF(TTM)10.8
FCFY7.58%
OCF(TTM)11.79
OCFY8.28%
SpS31.52
BVpS5.9
TBVpS-17.18
PEG (NY)2.08
PEG (5Y)4.45
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.43% | ||
| ROE | 55.99% | ||
| ROCE | 9.79% | ||
| ROIC | 7.86% | ||
| ROICexc | 12.08% | ||
| ROICexgc | 56.72% | ||
| OM | 14% | ||
| PM (TTM) | 10.48% | ||
| GM | 81.19% | ||
| FCFM | 34.25% |
ROA(3y)5.88%
ROA(5y)10.66%
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)9.4%
ROIC(5y)10.41%
ROICexc(3y)12.19%
ROICexc(5y)13.94%
ROICexgc(3y)39.61%
ROICexgc(5y)182.58%
ROCE(3y)11.7%
ROCE(5y)12.97%
ROICexcg growth 3Y-2.41%
ROICexcg growth 5YN/A
ROICexc growth 3Y8.25%
ROICexc growth 5Y-17.26%
OM growth 3Y2.65%
OM growth 5Y-7.92%
PM growth 3Y-45.05%
PM growth 5Y3.26%
GM growth 3Y-0.79%
GM growth 5Y-0.97%
F-Score6
Asset Turnover0.42
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 3.73 | ||
| Debt/FCF | 2.25 | ||
| Debt/EBITDA | 2.95 | ||
| Cap/Depr | 32.82% | ||
| Cap/Sales | 3.16% | ||
| Interest Coverage | 6.23 | ||
| Cash Conversion | 158.38% | ||
| Profit Quality | 326.93% | ||
| Current Ratio | 0.87 | ||
| Quick Ratio | 0.87 | ||
| Altman-Z | 1.85 |
F-Score6
WACC10.18%
ROIC/WACC0.77
Cap/Depr(3y)34.45%
Cap/Depr(5y)34.05%
Cap/Sales(3y)3.06%
Cap/Sales(5y)2.88%
Profit Quality(3y)236.48%
Profit Quality(5y)194.34%
High Growth Momentum
Growth
EPS 1Y (TTM)3.9%
EPS 3Y0.31%
EPS 5Y4.63%
EPS Q2Q%11.59%
EPS Next Y9.9%
EPS Next 2Y12.07%
EPS Next 3Y8.72%
EPS Next 5Y7.04%
Revenue 1Y (TTM)3.56%
Revenue growth 3Y7.28%
Revenue growth 5Y11.17%
Sales Q2Q%2.16%
Revenue Next Year4.52%
Revenue Next 2Y5.39%
Revenue Next 3Y5.55%
Revenue Next 5Y8.4%
EBIT growth 1Y-16.59%
EBIT growth 3Y10.12%
EBIT growth 5Y2.37%
EBIT Next Year34.25%
EBIT Next 3Y19.61%
EBIT Next 5YN/A
FCF growth 1Y13.1%
FCF growth 3Y2.33%
FCF growth 5Y5.43%
OCF growth 1Y14.56%
OCF growth 3Y3.56%
OCF growth 5Y5.97%