VMW - Embedded Expectations Analysis - 2022 01 05
VMWare, Inc. (VMW) currently trades above corporate and recent averages relative to Uniform earnings, with a 27.8x Uniform P/E (Fwd. V/E').Even at these levels, markets are pricing in expectations for Uniform ROA to compress to 14%, accompanied by 7% Uniform asset growth.
Meanwhile, analysts expect Uniform ROA to fade to 12% in 2023, accompanied by 7% Uniform asset growth.
If sustained going forward, these levels would imply a stock price closer to $94, representing approximately 18% equity downside for the firm.
However, the firm's most recent earnings call suggests management is confident about product leadership and demand.
VMware is engaged in the development and application of technologies with x86 server-based computing, separating application software from the underlying hardware. The company's product and service solutions are organized into three main product groups: Software-Defined Data Center, which is designed to transform the data center into an on-demand service that addresses application requirements; Hybrid Cloud Computing, which is comprised of VMware Cloud Provider Program and VMware Cloud Services; and End-User Computing solution, which consists of VMware Workspace ONE, its digital workspace platform, that includes Unified Endpoint Management and VMware Horizon application and desktop virtualization.
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