VMware Fourth Quarter Earnings Sneak Peek

VMware (NYSE:VMW) will unveil its latest earnings tomorrow, Monday, January 28, 2013. VMWare is a provider of virtual infrastructure software solutions from the desktop to the data center. It works with more than 1,300 technology partners, including leading server, microprocessor, storage, networking and software vendors.

VMware Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average estimate of analysts is for profit of 54 cents per share, a rise of 3.8% from the company’s actual earnings for the same quarter a year ago. During the past three months, the average estimate has moved up from 52 cents. Between one and three months ago, the average estimate moved up. It has been unchanged at 54 cents during the last month. Analysts are projecting profit to rise by 30.5% compared to last year’s $2.01.

Past Earnings Performance: Last quarter, the company missed estimates by 3 cents, coming in at net income of 39 cents per share versus a mean estimate of profit of 42 cents per share. In the second quarter, the company beat estimates by 2 cents.

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Wall St. Revenue Expectations: Analysts predict a rise of 20.8% in revenue from the year-earlier quarter to $1.28 billion.

A Look Back: In the third quarter, profit fell 11.7% to $156.8 million (36 cents a share) from $177.5 million (41 cents a share) the year earlier, missing analyst expectations. Revenue rose 20.4% to $1.13 billion from $941.9 million.

Here’s how VMware traded following its last earnings report 3 months ago and leading up to its upcoming earnings report this week:

vmw

Stock Price Performance: Between October 24, 2012 and January 22, 2013, the stock price rose $7.11 (8.3%), from $85.67 to $92.78. It saw one of its worst periods between November 6, 2012 and November 15, 2012 when shares fell for eight straight days, dropping 8.8% (-$8.14) over that span.

Key Stats:

With double-digit revenue growth the past four quarters, this earnings release is a chance to keep that positive trend going. The company has averaged year-over-year revenue growth of 23.6% over the last four quarters.

After experiencing income drops the past two quarters, the company is hoping to use this earnings announcement to rebound. Net income dropped 12.9% in the second quarter and then again in the third quarter.

Analyst Ratings: With 19 analysts rating the stock a buy, none rating it a sell and 12 rating the stock a hold, there are indications of a bullish stance by analysts.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 2.15 last quarter. Having a ratio above 2:1 is usually considered a good indicator of a company’s liquidity and ability to meet creditor demands. The company regressed in this liquidity measure from 2.56 in the second quarter to the last quarter driven in part by a decrease in current assets. Current assets decreased 15.6% to $5.44 billion while liabilities rose by 0.3% to $2.52 billion.

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(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)