Ask any of those among our 82,000-strong CAPS community who have rated EMC
Metric |
|
---|---|
CAPS stars (out of 5) |
***** |
Total ratings |
2,296 |
Bullish ratings |
2,194 |
Bull ratio |
95.5% |
Bearish ratings |
102 |
Bear ratio |
4.5% |
Bullish pitches |
397 |
Bearish pitches |
21 |
And yet this crowd could be measurably larger by this afternoon. Earlier today, EMC reported fourth-quarter and full-year results that, once again, look outstanding. Let's review.
For the fourth quarter, revenue was up 19% to $3.83 billion. Non-GAAP per-share net income -- that is, earnings excluding the effects of one-time charges and stock-based compensation -- was up 25%. GAAP earnings were up 33%.
For the full year, EMC improved sales by 19% and non-GAAP per-share earnings grew by 26.4%. Better still, gross margin was up 1.5 percentage points to 54.5%.
VMware
Therein lies the hope for EMC investors. Only 5% of the market for virtualization software is yet penetrated. If VMWare can fend off the likes of Microsoft
But that day could still be years away. Management's initial guidance for 2008 calls for 50% revenue growth in the VMware business and -- wait for it -- 9% growth in its core information infrastructure unit, which accounted for 90% of revenue in 2007. Not exactly the stuff of a growth stock, is it?
Nope, but that doesn't mean EMC is expensive. If we take management at its word, EMC today trades for roughly 15 times its $1.04 in projected 2008 non-GAAP net income. That's at worst reasonable, but it may prove cheap -- if, that is, you believe VMWare can fend off its well-financed competitors.
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- Find out why EMC is a five-star enterprise software firm.