Why VMware Stock Has Gained 17% So Far in 2018

What happened

Virtualization software specialist VMware (NYSE: VMW) outperformed the market through the first six months of 2018 by gaining 17% compared to a 2% uptick in the S&P 500 , according to data provided by S&P Global Market Intelligence .

The rally added to an impressive run in 2017  to generate significant long-term returns for shareholders of this cloud-services company.

^SPX Chart

^SPX data by YCharts

So what

Most of this year's rally came following VMware's fiscal first-quarter report that showed solid business results . A 21% spike in licensing revenue helped overall sales rise 14% even as operating margin improved to 19% of sales from 15% a year ago. "The strong start to fiscal 2019 has us well positioned to execute on our strategy," said CEO Pat Gelsinger in late May.

A customer service representative at work in front of a computer.

Image source: Getty Images.

Now what

Investors are still digesting news that Dell, which controls the majority of VMware's stock, is returning to the public markets . But while there's uncertainty about how that transaction will impact the share price, there's more clarity about VMware's upcoming operating results.

Gelsinger and his team expect revenue to improve by 12% this year, thanks to their deepening portfolio of virtualization solutions. Non-GAAP operating margin, meanwhile, is projected to reach 33.6% of sales, up slightly from last year's 33.2% result.

10 stocks we like better than VMware
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and VMware wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of June 4, 2018

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

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Personal Finance , Stocks
Referenced Symbols: VMW

More from Motley Fool


Motley Fool

Motley Fool

Market News, Investing

Research Brokers before you trade

Want to trade FX?