What is VMware worth?
VMware currently seems to be overvalued by 44%, based on the valuation of my discounted cash flows. The stock is currently priced at $ 150 on the market compared to my intrinsic value of $ 104.12. This means that the buying moment is probably gone for the moment. Another thing to keep in mind is that the stock price of VMware is fairly stable compared to the rest of the market, as shown by the low beta. This means that if you think that the current stock price would evolve over time to intrinsic value, a weak beta might suggest that it is probably not quick to reach this level, and once it is there, it can be difficult to downgrade an attractive buying range again.
Prospects are an important aspect when buying a stock, especially if you are an investor looking for growth in your portfolio. While value investors claim that intrinsic value over price is the most important, a more interesting investment trend would be a high growth potential at a cheap price. With a profit that is expected to grow by 36.60% over the next two years, the future looks bright for VMware. It appears that there are higher cash flows for the shares, which should result in a higher valuation of shares.
What does this mean for you?
Are you a shareholder? The optimistic future growth of VMware appears to have been taken into account in the current stock market, with equities being traded above their fair value. At this current price, shareholders can ask another question - do I have to sell? If you believe that VMware should trade below its current price, it may be profitable to sell at a high price and buy it back when the price drops to its true value. But before you make this decision, you must first see if the foundations have changed.
Are you a potential investor? If you keep an eye on VMware for a while, this may not be the best time to enter the stock. The price has exceeded the actual value, which means that there is no price increase. However, the optimistic outlook is encouraging for VMware, which means it is worthwhile to dive deeper into other factors to take advantage of the next price cut.
The price is only the tip of the iceberg. Discover more deeply what really matters - the basics - before deciding on VMware. You can find everything you need to know about VMware in the latest infographic search report. If you are no longer interested in VMware, you can use our free platform to view my list of more than 50 other growth markets with high potential.
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