Why VMware Stock Could Be a Smart Investment in 2017



VMware a top software pick in 2017

According to 247wallst.com, RBC recently announced that VMware (VMW) was one of its top large-cap software picks for 2017. After hitting a low, VMware stock recovered, returning more than 58% to shareholders in the last year.

In early 2016, VMware provided weak 2016 guidance due to the distractions posed by the impending Dell-EMC deal. This weak guidance contributed to the market’s subdued interest in the company in the year. However, with EMC (EMC) now being part of Dell, the market’s outlook has improved on VMware. EMC has an 80.0% stake and 97.0% voting rights in VMware.

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Recently, VMware increased its cloud technology initiatives and announced a strategic partnership with Amazon (AMZN). In early 2016, VMware also partnered with IBM (IBM) in the hybrid cloud space. VMware’s increased initiatives and strategic partnerships have enabled its stock price to surge more than 32% in the last six months.

 VMWare’s 4Q16 results expectations

VMware is scheduled to report its 4Q16 earnings on January 26, 2017. For 4Q16, Estimize, a financial estimate platform, expects VMware to report revenue of ~$2.0 billion and non-GAAP (generally accepted accounting principles) EPS (earnings per share) of $1.40.

In 3Q16, VMware reported revenue of $1.8 billion and non-GAAP EPS of $1.14. In the last ten quarters, including 3Q16, VMware’s quarterly results have managed to beat analysts’ expectations on both revenue and earnings.


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