A Leader in Cloud Computing

Jay Peroni, Lead Analyst, CEO and FounderBlog (Members), Blog (Public), Growth Investing

Cloud Computing

Cloud computing is the practice of using a network of remote servers hosted on the Internet to store, manage, and process data, rather than a local server or a personal computer.  As you may be aware, this is a rapidly growing industry. Forbes magazine expects cloud computing to see explosive growth in the years ahead.   As companies move from local storage to cloud storage, there will be a huge boom in the demand for cloud computing.  Let’s take a good look at an emerging opportunity…

VMWare a Leader in Cloud Computing

Company:                VMware Inc. (VMW)

Industry:                  Computer – Software

Sector:                      Computer and Technology

Profile: VMware, a global leader in cloud infrastructure and digital workspace technology, accelerates digital transformation by enabling unprecedented freedom and flexibility in how its customers build and evolve IT environments.

VMware provides virtualization solutions from the desktop to the data center. Their solutions enable organizations to aggregate multiple servers, storage infrastructure and networks together into shared pools of capacity that can be allocated dynamically, securely and reliably to applications as needed, increasing hardware utilization and reducing spending.

It has expanded their offering with virtual infrastructure automation and management products to address distributed and heterogeneous infrastructure challenges such as system recoverability and reliability, backup and recovery, resource provisioning and management, capacity and performance management and desktop security.


Reasons to Buy

  • Cloud computing is a huge growth industry. Cloud computed industry growth is expected to more than double from 2016 levels ($21.9 billion) to over $44.2 billion by 2020 (451 Research).
  • VMware provides much needed server virtualization software for large enterprise customers. Growth in network and storage virtualization should be big over next few years.
  • Signed huge deal with Amazon.com last year to use VMware’s data center management software of Amazon’s cloud computing service. VMware is now Amazon’s primary cloud partner.
  • VMware owns the most capable hybrid cloud architecture in the world. This provides a unique selling proposition (UPC), which should cement its standing in the industry.
  • VMW is a leader in the cloud computing field and the infrastructure platform choice of 100% of Fortune 500 companies.
  • It has strong marketing relationships with the biggest computer hardware vendors (IBM, Dell, Hewlett-Packard, etc.).

5 Point Stock Inspection

  1. Earnings Trend: Grade B
  • EPS Growth (Q1 2017): 12.28%
  • EPS Growth (F1 2017): 11.44%
  • Solid Earnings Growth, Momentum, and Surprises
  • Positive Analyst Earnings Revisions
  • Earnings growth last quarter greater than 20% over same quarter last year
  1. Financial Health: Grade A
  • Stronger financial profile than 85.62% of stock universe
  • Solid Sales Growth: Healthy 5-year growth
  • Net profit margin greater than industry average
  • Healthy Operating Margin Growth
  • Healthy Cash Flow
  • Strong Return on Equity
  1. Momentum: Grade A
  • Strong Momentum
  • Relative Strength is 88 out of 100
  • Stock up over 100% over past 12 months
  • Up over 26^% past 26 weeks.
  1. Risk: Grade A
  • Medium risk
  • Beta slightly below mark (0.97)
  • Has lower risk profile than 53.63% of stock universe
  1. Valuation: Grade B
  • Forward P/E at 25.66, less than industry average
  • PEG Ratio at 2.14
  • Good buy under $95/share

Overall:  Grade A

Bottom Line

VMWare (VMW) is a solid choice in the tech space especially if you want exposure to the rapid growing cloud computing industry.


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While Dual Returns has used reasonable efforts to obtain information from reliable sources, we make no representations or warranties as to the accuracy, reliability, or completeness of third-party information presented herein. The sole purpose of this analysis is information. Nothing presented herein is, or is intended to constitute investment advice. Consult your financial advisor before making investment decisions.