Despite today's 1.9% jump to $167.0, Vmware may soon be running into resistance as it is now within range of its average analyst target price of $165.9. With an average rating of hold, and analysts assigning target prices from 142.5 to 182.0 dollars per share, investors will be asking themselves if the Software stock can sustain this bullish run.
It seems the market sentiment regarding Vmware is mostly optimistic, since it has a short interest of only 1.9%. This is the percentage of the share float that is being shorted by investors who are hoping the stock's price will decrease in the future.
When a stock is sold short, it means an investor has borrowed shares of the stock from their broker, and then sold them at the going market price. The investor hopes for the price to decline, so that they might buy those shares back at a lower price in the future. Once they do, they can return the borrowed shares to their broker, and keep the profit they made on the transaction.
We can make inferences about the market sentiment surrounding Vmware by analyzing its rate of institutional ownership. If institutions such as hedge funds and pension funds are the primary shareholders of a corporation, it most likely means that its shares are a good investment according to those institutions' analysts.
At 49.6%, the rate of institutional ownership is average, indicating that a sufficient number of institutions have concluded that it is a stable investment. Beware, however, that the rate of institutional ownership could also indicate an ongoing proxy battle or takeover attempt -- so you should also periodically check the news about a stock whose institutional ownership you are tracking.
Overall, there is mixed market sentiment on Vmware because its an analyst consensus of little upside potential, a hold rating, a very low short interest, and only a small number of institutional investors. Warren Buffett famously said that in the short term, markets are voting mechanisms, but in the long term, they are weighing mechanisms. This means that long term investors should be aware of a stock's fundamentals before committing.
Buffett was one of the fist investors to focus on free cash flow as a yardstick for a company's health. Here are VMW's recent cash flows:
| Date Reported | Cash Flow from Operations ($ k) | Capital expenditures ($ k) | Free Cash Flow ($ k) | YoY Growth (%) |
|---|---|---|---|---|
| 2022-03-24 | 4,357,000 | -372,000 | 4,729,000 | 0.4 |
| 2021-03-26 | 4,409,000 | -301,000 | 4,710,000 | 14.07 |
| 2020-03-26 | 3,872,000 | -257,000 | 4,129,000 | 5.57 |
| 2019-03-29 | 3,657,000 | -254,000 | 3,911,000 | 12.58 |
| 2018-03-29 | 3,211,000 | -263,000 | 3,474,000 | 37.1 |
| 2017-02-24 | 2,381,000 | -153,000 | 2,534,000 |
