VMware (VMW:NYS) Fundamental Valuation Report

VMware (VMW:NYS) Fundamental Valuation Report

Fundamental Valuation Report


Technology:Software – Infrastructure

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$154.61 (USD) 03/29/2021

Weighted Valuation
$153.41 (USD)

Overall Rating
Fairly valued to slightly Overvalued by 0.8%

Valuation Models Multiples: $164.63 (USD)
Adjusted Book Value: $127.00 (USD)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Overvalued on an Asset Valuation
According to Analyst consensus at $168.60 this stock is Undervalued

Company Overview (VMW:NYS USD)

Price 154.61
Range 151.49 – 156.60
52 week 116.00 – 156.27
Open 153.00
Vol / Avg. 1.48M/1.17M
Mkt cap 64.82B
P/E 31.81
Div/yield 0.00/0.00
EPS 4.86
Shares 419.23M
Beta 0.79

Company Description

VMware, a majority-owned subsidiary of Dell, is an industry leader in virtual machines for data center servers and computer desktops. The software provider operates in the three segments of licenses, maintenance, and professional services. Customers include enterprises utilizing data centers, end-user computing, cloud providers, and software-defined networking. The Palo Alto, California, firm operates and sells on a global scale, with about half its revenue from the United States, through direct sales, distributors, and partnerships.

Valuation Details

 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 $229.12 (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: $229.12 1% 5% 1% 5%
WACC (or Ke) 7.10 $288.44 $189.60
Terminal Growth Rate 2.10 $193.32 $282.83
Tax Rate 0.14 $240.98 $217.25
Cash Flow 5,595,590,500 $218.50 $239.73
Capital Expenditures -253,800,000 $228.67 $229.56
Long Term Debt 1,500,000,000 $229.30 $228.94

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

Comparables Model

Using similar companies and price based ratios we generated a valuation of $307.77 (USD) for VMW:NYS. We also generated a valuation of $366.59 (USD) using other metrics and comparables.
The comparable companies were Dropbox (DBX:NAS), Zscaler (ZS:NAS), MongoDB (MDB:NAS), Okta (OKTA:NAS) and Square (SQ:NYS).

Company VMW:NYS End Date Value
Earnings/Share $4.86 (USD)
Book Value/Share $21.59 (USD)
Sales/Share $27.80 (USD)
Cash Flow/Share $10.42 (USD)
EBITDA/Share $8.53 (USD)
Price Based on Comps Adjustment Factor (%)
$0.00 (USD) -18.6
$0.00 (USD) 9.3
$644.05 (USD) 38.8
$183.91 (USD) -4.2
$329.93 (USD) 34.8
31.81 PE Ratio 470.86 0.00 0.00 0.00 0.00 470.86
7.16 PB Ratio 38.31 32.50 44.82 0.00 40.80 35.12
5.56 PS Ratio 23.17 5.66 40.96 25.83 32.86 10.52
14.84 PCF Ratio 164.07 18.99 160.96 0.00 214.56 261.78
18.27 EV to EBITDA 147.85 38.67 0.00 0.00 0.00 257.03


Using a multiples approach we generated a valuation of  $164.63 (USD) for VMW:NYS

Company VMW:NYS End Date Value
Earnings/Share $4.86 (USD)
Book Value/Share $21.59 (USD)
Sales/Share $27.80 (USD)
Cash Flow/Share $10.42 (USD)
EBITDA/Share $8.53 (USD)
Price Based on Comps Adjustment Factor
$176.52 (USD) 0
$137.32 (USD) 0
$167.94 (USD) 0
$170.46 (USD) 0
$170.92 (USD) 0
Ratios Ratio Average
PE Ratio 36.32
PB Ratio 6.36
PS Ratio 6.04
PCF Ratio 16.36
EV to EBITDA 20.03

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  VMW:NYS for the last 10 years was  5.88

We ran the Adjusted Book Value for  VMW:NYS and generated a book value of  $21.59 (USD)
By multiplying these we get an adjusted valuation of  $127.00 (USD)

Analyst Data

In the Stockcalc database there are 5 analysts that provide a valuation for VMW:NYS. The 5 analysts have a concensus valuation for VMW:NYS for 2022 of $168.60 (USD).


Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
3 2 0 4.1667 Outperform 2021-3-26

Current Price: 154.61 USD

Analyst Consensus
USD Millions 2022 2023 2024
Mean EPS 6.96 7.68 8.95
# EPS Analysts 6 5 1
Mean Revenue 12,732.10 13,860.00 15,023.70
# Revenue Analysts 5 5 1
Mean Target Price 168.60
Mean Cash Flow 9.48 10.38 11.37
Mean EBITDA 3,910.00 4,298.20 5,480.50
Mean Net Income 2,847.90 3,234.20 3,726.60
Mean Debt Outstanding -4,248.60 -7,354.20
Mean Tax Rate
Mean Growth Rate 16.81
Mean Capital Expenditure 380.40 374.20 446.60

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.

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