EMC (EMC) is one of the most favorable assets in the tech industry for investors to add to their portfolio. Investors and shareholders should expect the stock price of EMC to steadily increase throughout the remainder of 2012.
EMC shows substantial potential for growth and promising operations to sustain its leadership position in the industry for many years to come. Effective financials, acquisitions, partnerships and management values are the core factors that make EMC such a favorable investment for the near future and long-term outlook as well. Investors should buy EMC before the next earnings report is released and the price begins to rise. EMC is constantly developing and making strides to improve organically in the evolving tech industry.
Despite the recent declines in EMC's stock price the last three months, the price has actually increased by over 13 percent year-to-date. Sales growth is down by more than eight percent from the previous quarter but sales growth is up by more than 10 percent from the previous year. Return on equity, operating margin and net margin have all been relatively stable while increasing slightly over the last three quarters. EMC's net profit margin and return on equity are significantly higher than the industry average. The stock price is around 20 times earnings but it is projected to improve significantly within the next year. Both the quick ratio and current ratio exceed one while the gross margin and institutional ownership both exceed 60 percent. EMC's financials show it has growth potential as well as the ability to outperform its competition while having the cash flow to endure fluctuations in future earnings or operating expenses.
One of the most promising aspects of EMC's operations in regards to its future outlook is its ongoing relationship with Microsoft (MSFT). EMC has recently announced the release of New Proven Solutions to help commercial customers operate and deploy services in the cloud infrastructure. EMC focuses on providing solutions and infrastructure for establishing and managing private cloud infrastructures for clients using Microsoft products like the Office Suite and Windows Operating system. These new releases embrace simplified approaches for IT management. EMC is currently the number one choice for infrastructure and technical support for commercials clients using Microsoft products. EMC also provides certified consultant services to aid clients in creating private cloud infrastructures and virtual networks. As Microsoft goes, so does EMC, this relationship and the prominence of the cloud industry are the major reasons that EMC has such a promising future outlook for growth in the tech industry.
The continuous innovations in the data storage and emerging cloud industry are the dynamics that makes EMC a leader amongst competitors like Hewlett-Packard (HPQ), IBM (IBM) and NetApp (NTAP). Strong global demand keeps these companies relevant and necessary for the foreseeable future. EMC's Isilon Star and VSPEX infrastructure are widely popular for creating a number of options for corporations and commercial clients transitioning their business to the cloud.
EMC's aggressive pursuit in cloud technology and services is helping to transform the IT industry and operating standards in its favor. Software as a service and the merging idea of IT as a service is EMC focus and forte. The recently announced acquisition of Pivotal Labs will help EMC develop software and tools to help its business and clients by creating an array of business solutions. EMC is a more stable and promising investment in the cloud and IT industry than both IBM and HP. EMC has higher revenue growth and more focused operations in these industries than IBM and HP is still undergoing its transition phase while integrating high-priced acquisitions.
Clouds are becoming more of the norm amongst corporations. Many of the corporations that currently use cloud services are not focusing on hosting their own private clouds. The ability to provide in-house cloud infrastructures and virtual networks separates EMC from most of the other tech entities that are just starting to migrate to these types of services. Many analysts have EMC rated as a buy and an undervalued investment in the industry. Net operating cash flow has improved by over 45 percent from last year while the debt to equity ratio is below .1.
EMC currently has 25 percent of the market share for the enterprise network storage market. Over 50 percent of its revenues come from United States, over 28 percent from EMEA, over five percent from Latin America and over 13 percent of revenues come from the Asian market. EMC currently has a net cash position exceeding $4.5 billion. Continuously improving its data storage software capabilities through acquisitions and investing in R&D is proving to be a practical and effective plan for increasing earnings each quarter.
EMC also acquired Syncplicity earlier in the year to improve its presence in the cloud-storage market. EMC hopes to make Syncplicity's cloud-based management software a standard tool among larger corporations. EMC provides a number of hybrid cloud solutions in order to meet the growing divergent demands of corporations embracing cloud services and infrastructure.
Analysts expect IT spending to increase five percent throughout the year as more corporations focus on storage systems and mobile device applications. In addition, EMC acquired XtremIO to offer flash storage capabilities to differentiate it from competitors by providing high-speed storage capabilities.
Investing in EMC does not come without risks. As much as cloud computing is an opportunity for EMC, it also poses potential threats. Cloud computing could rattle some of the relationships EMC has made with its clients, as clients will have more choice between service and software providers, instead of building a relationship with one company. Additionally, as more business transition over to cloud computing, EMC will face greater competition and a customer base that is more capable of negotiating deals through leveraging with other major market players. EMC could certainly see some of its business cannibalized through this transition.
On the other hand, flash storage is especially appealing to media organizations and corporations interested in hosting their own in-house infrastructures that require high speed archiving or communications over the internet. This, along with EMC's numerous ventures and releases on the horizon, ensure its success in the tech industry for the long-term.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.