Improved Fiscal 2018 Guidance Provided a Boost to VMware Stock
Improved fiscal 2018 guidance
Earlier in the series, we discussed VMware’s (VMW) hybrid cloud strategy and the launch of new tools in accordance with its strategy. We also discussed the company’s better-than-expected fiscal 2Q18 results.
With its fiscal 2Q18 earnings results, which beat analysts’ expectations, VMware has once again raised its guidance for fiscal 2018. This improved guidance provided a boost to its stock, which has risen more than 40% in the last one-year period.
VMware expects its revenues and EPS (earnings per share) to reach ~$7.8 billion and $5.06, respectively, as the chart below shows. This revised guidance compares to its previous forecasts of ~$7.6 billion in revenues and earnings per share of $4.91.
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Fiscal 2Q18 billings exceeded analysts’ expectations
VMware’s fiscal 2Q18 billings rose 18% to ~$2.2 billion, which was significantly above analysts’ consensus expectations of ~$2.1 billion. Billings indicate future revenues that are not yet visible on a company’s income statement. This growth in billings allowed VMware to again raise its guidance for fiscal 2018.
Investors can consider the SPDR S&P 500 ETF (SPY) (SPX) to gain exposure to the technology sector. This ETF invests ~8.4% of its holdings in the application software space.