VMware’s stock (NYSE: VMW) is scheduled to report its fiscal Q3 2022 (ended Oct 2021) results on Tuesday, November 23. We expect VMW to beat the consensus estimates for revenues and earnings. The company has reported better than expected revenue and earnings figures in each of the last four quarters. VMW’s revenue growth continued in H1 of FY 2022 led by its Subscription and SaaS segment which saw revenue grow by 26% y-o-y. We expect the segment to drive the third-quarter FY2022 results, as well.
Our forecast indicates that VMware’s valuation is $178 per share, which is 42% above the current market price of $125. Look at our interactive dashboard analysis on VMware’s pre-earnings: What To Expect in Q3? for more details.
(1) Revenues expected to be ahead of consensus estimates
VMware’s revenues for full-year 2021 were $11.8 billion – up 8.8% y-o-y, with high growth seen in the Subscription and SaaS segment. Trefis estimates VMW’s fiscal Q3 2022 (ended Oct 2021) revenues to be around $3.3 billion, above the $3.1 billion consensus estimate. We expect Subscription and SaaS segment growth to drive the growth in the Q3. Our dashboard on VMware’s revenues offers more details on the company’s operating segments along with our forecast for the next two years.
(2) EPS likely to beat the consensus estimates
VMW’s Q3 2022 (ended Oct 2021) earnings per share (EPS) is expected to be $1.60 per Trefis analysis, slightly above the consensus estimate of $1.54. In FY 2022, we expect the company to see a slight fall in net income margin to 16.7%, but overall EPS to improve to $5.03 in FY2022.
(3) Stock price estimate 14% above the current market price
Going by our VMware’s valuation, with an FY 2023 EPS estimate of $6.43 and a P/E multiple of 27.6x, translates into a price of $178, which is 42% above the current market price of $125.
Note: P/E Multiples are based on Share Price at the end of the year and reported (or expected) Adjusted Earnings for the full year
While VMW stock is likely to move higher in the near term, there are other stocks that look like a Better Bet Than VMW Stock. Also, VMware Peer Comparisons summarizes how the company fares against peers on metrics that matter.
What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since 2016.