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Trade-Ideas: VMware (VMW) Is Today's Post-Market Laggard Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified VMware ( VMW) as a post-market laggard candidate. In addition to specific proprietary factors, Trade-Ideas identified VMware as such a stock due to the following factors:

  • VMW has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $121.7 million.
  • VMW is down 3.7% today from today's close.

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More details on VMW:

VMware, Inc. provides virtualization infrastructure solutions in the United States and internationally. VMW has a PE ratio of 46.0. Currently there are 14 analysts that rate VMware a buy, 2 analysts rate it a sell, and 14 rate it a hold.

The average volume for VMware has been 1.8 million shares per day over the past 30 days. VMware has a market cap of $10.8 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.49 and a short float of 10.8% with 5.78 days to cover. Shares are down 11.6% year to date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates VMware as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • VMW's revenue growth has slightly outpaced the industry average of 5.9%. Since the same quarter one year prior, revenues rose by 10.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • VMW's debt-to-equity ratio is very low at 0.07 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, VMW has a quick ratio of 2.11, which demonstrates the ability of the company to cover short-term liquidity needs.
  • VMWARE INC has improved earnings per share by 29.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, VMWARE INC increased its bottom line by earning $1.71 versus $1.67 in the prior year. This year, the market expects an improvement in earnings ($3.32 versus $1.71).
  • Net operating cash flow has increased to $534.28 million or 36.53% when compared to the same quarter last year. In addition, VMWARE INC has also vastly surpassed the industry average cash flow growth rate of -17.10%.
  • The gross profit margin for VMWARE INC is currently very high, coming in at 90.83%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 19.63% trails the industry average.

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