The IT sector is booming, and there is growing demand for new Cloud agnostic applications that can connect seamlessly and securely with the off-premise environment. EMC (EMC, Financial) is one company focusing on this area. Having posted strong results in the recently reported third quarter, it looks well positioned to benefit from the growing IT segment. Management is of the opinion that its broad-based technology and expertise will be a key aspect that will help the company grow in the near term, giving EMC a competitive edge over its peers.
Consistent performances
EMC has been consistent in its performance. Its capability of delivering high quality services in time for the entire infrastructure stack led a bank in Australia to choose EMC VMware technologies to be a key part of it. Moreover, EMC is focusing on the federal business. In this regard, EMC is expecting an increase in the number of wins that will help the company to leverage its capabilities across the platform. EMC is laser focused on building a strong portfolio across EMC II, VMware and Pivotal segments.
The company is also expecting a lot from the Pivotal segment. The company has already transitioned this to the NextGen application, which seems to be a good move by EMC, and it has also contributed to the company’s top line in the recently reported quarter. Further, EMC is seeing good customer engagement across Pivotal CF. Seeing this momentum, EMC is making efforts to improve the deployments of system and software for missiles and flight systems. In fact, the company is engaged in developing a solution that will optimize media revenue through analytics. With the deployment of Pivotal CF, EMC is creating a base for this initiative.
Segments are doing well
VMware is also one of the important segments of the company, which is also moving on well in the market which can be seen by the strong contribution to the top line by it. VMware is mainly focusing on its key areas such as software defined data centres, hybrid cloud solution end user computing. Besides this, in the hybrid cloud, its new vCloud air seeing positive response in the new markets. This is benefiting VMware’s hybrid Cloud portfolio and has helped greatly to hold a market leading position of the company in the market.
Moreover, EMC is also seeing growth in its customer base across the world. For example, one of the companies in the U.S. have opted for EMC for building out IT as a service. It is largely using Big Data Analytics platform which is a service of EMC. In addition, A Canadian Oil Company is also including EMC for the deployment of its hybrid cloud solutions. Moreover, a Chinese service provider has also included EMC’s security-as-a-service offering for its new upcoming platform.
Conclusion
With a trailing P/E of 24.01, EMC looks reasonable now, while its earnings are growing steadily with a forward P/E of 13.96. But, for the next five years, EMC’s earnings are growing at a CAGR of 10.08%, which is lower than the industry average of 15.36%. But, the growth it is seeing across its segments are expected to drive its profitability further in the coming days so as of now the investors can definitely pick EMC in their portfolio.
