Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
) has been reiterated by TheStreet Ratings as a buy with a ratings score of B- . The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, increase in net income, growth in earnings per share and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 1.4%. Since the same quarter one year prior, revenues rose by 22.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- VMW's debt-to-equity ratio is very low at 0.08 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 1.98, which demonstrates the ability of the company to cover short-term liquidity needs.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Software industry average. The net income increased by 2.7% when compared to the same quarter one year prior, going from $200.43 million to $205.77 million.
- VMWARE INC's earnings per share improvement from the most recent quarter was slightly positive. 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 ($3.23 versus $1.71).
- The gross profit margin for VMWARE INC is currently very high, coming in at 88.80%. Regardless of VMW's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, VMW's net profit margin of 15.91% is significantly lower than the industry average.
VMware, Inc. provides virtualization infrastructure solutions in the United States and internationally. VMWare has a market cap of $9.82 billion and is part of the technology sector and computer software & services industry. The company has a P/E ratio of 44.5, above the S&P 500 P/E ratio of 17.7. Shares are down 19.2% year to date as of the close of trading on Tuesday.
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--Written by a member of TheStreet Ratings Staff.
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