Is EMC Corporation Undervalued?

I started looking at the valuation of EMC Corporation (EMC) for a case study I was working on; my work was never meant to be published or shared with anyone but as I got the final valuation of the company, I realized that there really is great upside potential for the stock. In fact, according to my calculations, EMC’s current price of $15.37 is undervalued by as much as 30% or $7.4.

For my analysis I used a WACC discount rate of 11.39% which gave EMC a present value of $16.10 but by adding the full value of VMware, which I believe is worth the high end estimate of $10Billion based on early evaluations of this summer’s IPO, and adding the cash and real estate values into the stock price, I came up with a final price of $22.82 which represents a 32.64% increase to the current market price of 15.37.

EMC 1-yr chart

Disclosure: none