Buy Side Expects Big Quarter From VMware

| About: VMware, Inc. (VMW)

VMware Inc. (NYSE:VMW) is set to report FQ4 2013 earnings after the market closes on Tuesday, January 28th. VMware is an American software company that specializes in cloud and virtualization technology and services. In December cloud services competitor Oracle (NYSE:ORCL) posted a better than expected quarter and all indications are that the cloud services industry will continue to boom in 2014. IBM (NYSE:IBM) recently announced its intention to sell off its low-end servers business and purchase 15 data centers around the globe to bolster its own cloud-services businesses. Here's what the buy-side expects from VMware this afternoon.

The information below is derived from data submitted to the platform by a set of Buy Side and Independent analyst contributors.image

(Click Here to see All Estimates for VMware)

The current Wall Street consensus expectation is for VMware to report 99c EPS and $1.473B revenue while the current consensus from 20 Buy Side and Independent contributing analysts is $1.01 EPS and $1.478B revenue. This quarter the buy-side as represented by the communtiy is expecting VMware to beat Wall Street expectations on both profit and revenue.

The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case we are seeing a moderate differential between the 2 groups' forecasts.image

Over the previous 2 years the consensus for profit has been more accurate than the Wall Street consensus in each quarter. By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students, and non professional investors, Estimize has created a data set that is up to 69.5% more accurate than Wall Street, but more importantly it does a better job of representing the market's actual expectations. It has been confirmed by an independent academic study from Rice University that stock prices tend to react with a more strongly associated degree to the expectation benchmark from Estimize than from the Wall Street consensus. image

The distribution of estimates published by analysts on Estimize range from 98c to $1.05 EPS and $1.459B to $1.510B in revenues. This quarter we're seeing a moderate distribution of estimates compared to previous quarters.

The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A larger distribution of estimates signaling less agreement in the market, which could mean greater volatility post earnings.image

The Wall Street EPS consensus increased throughout the quarter from a starting point of 97c to 99c. The Wall Street revenue consensus slipped throughout the quarter from $1.476B to $1.473B. The Estimize EPS consensus returned to its starting point of $1.01 while the Estimize revenue consensus increased from $1.471B to $1.478B. Timeliness is correlated with accuracy and near the end of the quarter we saw sharp upward revisions from both Wall Street and Estimize, which could be a positive sign.image

The analyst with the highest estimate confidence rating this quarter is cixoTrades who projects $1.03 EPS and $1.481B in revenue. In the Winter 2014 season, cixoTrades is currently ranked as the 24th best analyst and is ranked 21st overall among over 3,500 contributing analysts. Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case the highest rated estimate is making a bullish call expecting VMW to beat both Wall Street and Estimize on EPS and revenue. The last time cixoTrades estimated on VMware that user hit the nail on the head for EPS and came within $10 million on revenue.

Disclosure: No positions

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Tagged: , Technical & System Software, Earnings
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