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VMWare Inc (NYSE:VMW)
Intrinsic Value (FCF Projected)
$68.14 (As of Today)

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value (DCF), or Discounted Earnings (DCE) Intrinsic Value (DE) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company. The details of how we calculate the intrinsic value of stocks are described in detail here.

As of today, VMWare Inc's FCF projected intrinsic value is $68.14. The stock price of VMWare Inc is $87.72. Therefore, VMWare Inc's Price to Intrinsic Value (FCF Projected) Ratio of today is 1.3.

VMW' s 10-Year Price to Intrinsic Value (FCF Projected) Range
Min: 1.2   Max: 3.69
Current: 1.28

1.2
3.69

During the past 11 years, the highest Price to Intrinsic Value (FCF Projected) Ratio of VMWare Inc was 3.69. The lowest was 1.20. And the median was 1.98.

VMW's Price to Intrinsic Value (FCF Projected) is ranked higher than
88% of the 2995 Companies
in the Global Software - Infrastructure industry.

( Industry Median: 0.00 vs. VMW: 1.28 )

Definition

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value (DCF), or Discounted Earnings (DCE) Intrinsic Value (DE) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company.

The details of how we calculate the intrinsic value of stocks are described in detail here.

This method smooths out the free cash flow over the past 6-7 years, multiplies the results by a growth multiple, and adds a portion of total equity.

Value = ((Growth Multiple)*Free Cash Flow(6 year avg) + 0.8*Total Equity(most recent))/Shares Outstanding

In the case of negative total equity, the following formula is used (see the Total Equity section for the reason):

Value = ((Growth Multiple)*Free Cash Flow(6 year avg) + Total Equity(most recent)/0.8)/Shares Outstanding


Here VMWare Inc's FCF(6 year avg) is calculate as

VMWare Inc Quarterly Data

201212201303201306201309201312201403201406201409201412201503
total_freecashflow 412598459543589673333506317577
201006201009201012201103201106201109201112201203201206201209
total_freecashflow 168159350423342447357543347361
200906200909200912201003
total_freecashflow 199176245302

Add all the Free Cash Flow together and divide 6 will get VMWare Inc's FCF(6 year avg) = $1,571.18.

VMWare Inc's FCF Projected Intrinsic Value for today is calculated as

Intrinsic Value=(Growth Multiple*Free Cash Flow(6 year avg)+Total Equity(Mar15)*0.8)/Shares Outstanding
=(14.8626533105*1571.18166667+7480*0.8)/430.496
=68.14

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.


Explanation

The growth multiple is capped between 8.35 and 17.74.

Total equity weighting is more art than science and it should always be revisited in more detail when researching a company. Weightings from 0% to 100% to more than 100% are possible. 80% was chosen as a happy medium after taking the above ideas into consideration. Learn more here.

VMWare Inc's Price to FCF Projected Intrinsic Value Ratio for today is calculated as

Price to FCF Projected Intrinsic Value=Share Price/FCF Projected Intrinsic Value
=87.72/68.1444854295
=1.29

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.


Related Terms

Intrinsic Value (DE), Intrinsic Value (DCF), Free Cash Flow


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

VMWare Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
iv_dcf_share 0.000.000.000.000.0024.1233.5943.5856.5865.58

VMWare Inc Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
iv_dcf_share 43.5846.9849.8553.4956.5860.4561.9664.5065.5868.14
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