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Why VMware Stock Jumped 14% in February

By Chris Neiger – Updated Apr 12, 2019 at 5:08PM

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Investors were snatching up shares ahead of the company's fourth-quarter results.

What happened

Shares of VMware, Inc. (VMW 0.69%) popped 13.7% last month, according to data provided by S&P Global Market Intelligence, as investors were likely anticipating solid growth from the company's fourth-quarter 2019 results.

So what

It's not uncommon for some investors to pick up shares of a company leading up to that company's quarterly earnings report (though they typically don't push the company's share price up as much as VMWare's rose), and that seems to be the case for what happened last month with VMware.

When VMware reported its fourth-quarter results at the end of the month, revenue was up 16% year over year to $2.59 billion, and GAAP net income was $502 million, up from a net loss of $387 million in the year-ago quarter.

Check out the latest earnings call transcript for VMWare.

Person sitting at desk using computer with chart image overlaid on top.

Image source: Getty Images.

The company's share price has been pretty volatile over the past 12 months, but February's jump added to the company's impressive gains so far this year. Since the beginning of this year the company's shares have jumped about 27%.

Now what

VMWare's share price has been flat so far this month, but that lull isn't likely to last long. Management is expecting first-quarter revenue of about $2.24 billion, which would be a 12% jump year over year. Non-GAAP earnings are expected to reach $1.27 per share, up slightly from $1.26 in the year-ago quarter. With investors already optimistic about VMware, they may be inclined to push the company's share price up ahead of first-quarter results just as they did for the fourth quarter last month.

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool recommends VMware. The Motley Fool has a disclosure policy.

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