VMW – Market expectations are for Uniform ROA to fade, but management is confident about product leadership, stakeholder initiatives, and profitability

March 18, 2022

  • VMWare, Inc. (VMW) currently trades near corporate but above recent averages relative to Uniform earnings, with a 25.9x Uniform P/E (Fwd. V/E’).
  • At these levels, markets are pricing in expectations for Uniform ROA to compress to 14%, accompanied by 7% Uniform asset growth.
  • Similarly, analysts expect Uniform ROA to fade to 13% in 2023, accompanied by 10% Uniform asset growth.
  • If sustained going forward, these levels would imply a stock price closer to $118, representing approximately 7% equity upside for the firm.
  • However, the firm’s most recent earnings call suggests management is confident about product leadership, stakeholder initiatives, and profitability.

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