NEW YORK (TheStreet) -- For as much as I have made recently regarding some of the dominant companies within the cloud such as Red Hat and Salesforce.com, there's an underappreciated name: enterprise storage giant EMC. That's because of the recent enterprise adoption of "big data," which is on the verge of being dominated by IBM and Oracle. But it's not because EMC is not a force in its own right.
Despite being a leader in a major enterprise market, EMC's problem (with analysts) is that it lacks "flare." But I am now realizing that is Wall Street's loss and astute investors' gain. It's one of the steadiest performers, one that continues to match superior sales growth with profitability. From that standpoint, the company just might be 20% undervalued even on the most conservative assumptions, and it further affirmed this with its recent earnings announcement.
The quarter that was
The company reported first-quarter net income of $587 million, 23% higher than in the previous year. It logged $5.1 billion in revenue, an 11% increase annually and in line with analysts' estimates. U.S. sales accounted for more than half of consolidated revenue, registering $2.6 billion. EMC beat the Street by a penny on profits of 37 cents a share, while also ending the quarter with $10.9 billion in cash and investments.Revenue from outside the U.S. was highlighted by the Asia Pacific and Japan region, which reached an all-time record of 20% growth. For 2012, the company sees revenue of $22 billion, in line with the previous Street consensus at $22.2 billion. EMC sees full-year profits of $1.70 a share, a bit below the Street's view of $1.75. But that should not be perceived as a disappointment if one truly understands the company's track record of conservative outlooks, particularly when considering that profits continue to surge due to stronger gross margins as well as an increase of 26% in operating income.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV