Wunderlich analyst Kaushik Roy points to increased market share and presence in each of the top four tech "megatrends" -- storage, virtualization, security, and analytics -- as evidence that the stock has been undervalued.
"The company has a strong management and technical team," wrote Roy in a note to clients. "We believe that the stock is undervalued at these levels and the risk/reward for owning the stock is compelling."
Industry analyst expect cloud computing to become a driving force in IT as more smartphones, tablets and laptops enter the cloud. The hybrid cloud market is expected to reach $79.54 billion by 2018.
EMC was up 1% to $27.37 in morning trading.
TheStreet Ratings team rates EMC CORP/MA as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate EMC CORP/MA (EMC) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, good cash flow from operations and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- EMC's revenue growth has slightly outpaced the industry average of 4.7%. Since the same quarter one year prior, revenues rose by 10.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- EMC CORP/MA has improved earnings per share by 23.1% 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, EMC CORP/MA increased its bottom line by earning $1.33 versus $1.23 in the prior year. This year, the market expects an improvement in earnings ($1.95 versus $1.33).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Computers & Peripherals industry average. The net income increased by 17.5% when compared to the same quarter one year prior, going from $869.92 million to $1,022.00 million.
- Net operating cash flow has increased to $2,190.00 million or 15.30% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -4.13%.
- The gross profit margin for EMC CORP/MA is rather high; currently it is at 69.95%. Regardless of EMC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 15.29% trails the industry average.
- You can view the full analysis from the report here: EMC Ratings Report