Leader in Virtualization technology - with tailwinds like Cloud Computing, Containerization and 5G all set to push its already growing business. Competition is strong but limited in number. Main risk is expensive acquisitions.
- Core Competency? Market leader in Hardware and Software Virtualization.
- Products: Better or Cheaper? Trying to be Better by offering end-to-end virtualization.
- Historical Growth? Solid Revenue, EBITDA Margin and Free Cash Flow growth.
Durability of Competitive Advantage:
- Competition/Threats? Big Cloud providers, Red Hat, Nutanix. Container startups.
- Protection/Moat? Strong. High Switching Costs. Tie-ups with Big Cloud Providers.
- Cash Flow Volatility? Should be muted because of the stickiness of the business.
- Strategy/Action? Average. Price paid for recent acquisitions is questionable.
- Return on Equity? High. High margin business, low debt.
- Sustainable Free Cash Flow? About $2.8 billion. Translated to roughly 135/share.