VMware (VMW:NYS) Fundamental Valuation Report


This Report was generated using the tools available on StockCalc.com. Patchell Brook Equity Analytics Inc. emphasizes that the user assumes all risks associated with the use of this report or the Stockcalc website including, but not limited to, all terms and conditions mentioned in the legal disclaimer.
To access all of the tools on Stockcalc, including more detailed valuation reports and the models used to generate these valuations, please subscribe for a free 30 day trial of Stockcalc here.

VMware $121.27 (USD) Close Price as of 29/03/2018

Based on the analysis conducted in this report, VMware, (VMW:NYS) is found to be  Fairly valued to slightly Undervalued.

Company VMware
Symbol:Exchange VMW:NYS
Industry Technology:Software-Infrastructure
Close Price/Date $121.27 (USD) 29/03/2018
Weighted Average Valuation $121.52 (USD)
Summary VMW:NYS is found to be  Fairly valued to slightly Undervalued by 0.2% using the 3 valuation models shown below.
Valuation Models Used Analyst Consensus: $142.00 (USD)
(in order of importance) Discounted Cash Flow: $102.86 (USD)
Comparables: $97.39 (USD)
Valuation Methods Analysis This company is:
Cash Flow Basis: Overvalued on a Cash Flow Valuation basis
Comparable Company Basis: Overvalued on a Comparable Valuation basis
Asset Basis: Overvalued on an Asset Valuation basis

Valuation Details

VMware Valuations

Summary chart

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for VMW:NYS

Using a discounted cash flow model we generated an intrinsic value of $102.86 (USD) for VMW:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

VMW:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $102.86 1% 5% 1% 5%
WACC (or Ke) 6.59 $129.77 $84.95
Terminal Growth Rate 1.60 $86.83 $126.93
Tax Rate 0.40 $109.75 $95.98
Cash Flow 3,133,675,165 $98.42 $107.31
Capital Expenditures -289,200,000 $102.45 $103.28
Long Term Debt 1,500,000,000 $103.05 $102.68

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $97.39 (USD) for VMW:NYS. We also generated a valuation of $107.01 (USD) using other metrics and comparables.
The comparable companies were CA (CA:NAS), Citrix Systems (CTXS:NAS) and Oracle (ORCL:NYS)

Company VMW:NYS End Date Value
Earnings/Share $1.38 (USD)
Book Value/Share $20.49 (USD)
Sales/Share $17.57 (USD)
Cash Flow/Share $5.90 (USD)
EBITDA/Share $5.35 (USD)
Price Based on Comps Adjustment Factor (%)
$59.87 (USD) -8.3
$130.52 (USD) 7.7
$78.63 (USD) 90.1
$83.28 (USD) -8.7
$55.36 (USD) 19.1
VMW:NYS Ratios Used Average Values CA:NAS CTXS:NAS ORCL:NYS
43.62 PE Ratio 249.87 33.56 662.86 53.20
5.92 PB Ratio 6.37 2.47 12.73 3.91
7.25 PS Ratio 4.48 3.38 5.11 4.94
21.60 PCF Ratio 14.12 13.65 15.89 12.84
22.55 EV to EBITDA 12.27 9.69 16.86 10.25

Multiples

Using a multiples approach we generated a valuation of  $85.93 (USD) for VMW:NYS

Company VMW:NYS End Date Value
Earnings/Share $1.38 (USD)
Book Value/Share $20.49 (USD)
Sales/Share $17.57 (USD)
Cash Flow/Share $5.90 (USD)
EBITDA/Share $5.35 (USD)
Price Based on Comps Adjustment Factor
$48.81 (USD) 0
$93.20 (USD) 0
$98.43 (USD) 0
$92.48 (USD) 0
$96.75 (USD) 0
Ratios Ratio Average
PE Ratio 35.37
PB Ratio 4.55
PS Ratio 5.60
PCF Ratio 15.68
EV to EBITDA 18.09

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  VMW:NYS for the last 10 years was  4.66

We ran the Adjusted Book Value for  VMW:NYS and generated a book value of  $19.26 (USD)
By multiplying these we get an adjusted valuation of  $89.78 (USD)

Analyst Data

In the Stockcalc database there are 7 analysts that provide a valuation for VMW:NYS. The 7 analysts have a concensus valuation for VMW:NYS for 2018 of $142.00 (USD).

VMW:NYS VMware

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
5 3 0 4.0000 Outperform 2018-3-29

Current Price: not available

Analyst Consensus
USD Millions 2019 2020 2021
Mean EPS 5.94 6.32 6.68
# EPS Analysts 7 7 2
Mean Revenue 8,620.10 9,040.60 9,183.90
# Revenue Analysts 6 6 2
Mean Target Price
Mean Cash Flow 7.15 8.48
Mean EBITDA 2,914.00 3,036.20
Mean Net Income 2,395.50 2,569.40 2,436.00
Mean Debt Outstanding -4,053.60 -12,971.50 -11,554.00
Mean Tax Rate 20.50 20.50 20.50
Mean Growth Rate
Mean Capital Expenditure 277.50 282.80 340.00

Company Overview (VMW:NYS USD)

Price 121.27
Range 119.10 – 122.48
52 week 85.89 – 150.00
Open 120.28
Vol / Avg. 1.93M/2.15M
Mkt cap 48.97B
P/E 43.62
Div/yield 0.00/0.00
EPS 1.38
Shares 403.82M
Beta 1.19
Summary chart

Detailed Company Description

VMWare Inc provides virtualization and cloud infrastructure solutions. It is engaged in the development and application of virtualization technologies with x86 server-based computing, separating application software from the underlying hardware.

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.
The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).
The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.
We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.
Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.
With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.
If we have Analyst coverage for the company we use the consensus target price here.

Notice to User


The contents of this report and the Stockcalc website are provided on an ‘‘as is’’ or ‘‘as available’’ basis with all faults and may not be current in all cases. The information in this report or on the website is subject to continuous change and Patchell Brook Equity Analytics Inc. assumes no responsibility to update or amend such information or that the information will be current. Patchell Brook Equity Analytics Inc. does not claim that all information, calculations or opinions presented in this report or on its website are true, reliable, or complete. Accordingly, you should not rely on any of the information as authoritative or as a substitute for the exercise of your own skill and judgment in making an investment or other decision. Any information, data, opinions, calculations or recommendations provided by third parties through links to other websites or otherwise made available through this report or website are solely those of the third party and not of Patchell Brook Equity Analytics Inc. Please refer to the Terms of Use on www.stockcalc.com for further information.
To access all of the tools on Stockcalc, including more detailed valuation reports and the models used to generate these valuations, please subscribe for a free 30 day trial of Stockcalc here.

%d bloggers like this: