Headquartered in Round Rock, Texas, Dell Technologies Inc. (DELL) is one of the largest technological corporations in the world. The company operates mainly through three segments — Infrastructure Solutions Group (ISG), Client Solutions Group (CSG), and Vmware. The company is ranked #1 in Virtualization, Storage and Servers, and has served 98% of the Fortune 500 companies.
Managing its operating expenses in a disciplined manner, DELL has been able to overcome the business challenges posed by the pandemic. The stock has rallied 45.4% over the past year to close yesterday’s trading session at $74.71, after hitting its all-time high of $74.82.
The company’s growth has been accelerated by its Software-as-a- service (SaaS) strategy and hybrid cloud capabilities. More technological advancements along with the stock’s potential upside based on a few other factors, have helped the stock earn a “Strong Buy” rating in our proprietary rating system.
Here is how our proprietary POWR Ratings system evaluates DELL:
Trade Grade: A
DELL is currently trading above its 50-day and 200-day moving averages of $68.07 and $62.23, respectively, indicating an uptrend. Moreover, DELL has gained more than 10% over the past month, reflecting a short-term bullishness.
The company’s revenue has climbed 2.8% year-over-year to $23.5 billion for the quarter ended October 31, 2020 driven primarily by increased demand for remote work and learning solutions. Its Client Solutions group revenue increased 8% year-over-year to $12.3 billion. Vmware revenue increased 8% year-over-year to $2.9 billion. And while net income increased 59.6% year-over-year to $881 million, non-GAAP EPS increased 16% year-over-year to $2.03.
It was reported on November 12 that DELL, along with FedEx Corporation (FDX) and Switch, Inc. (SWCH), is working to develop exascale multi-cloud edge infrastructure services. This is expected to allow organizations to make real-time decisions using capabilities such as artificial intelligence (AI), machine learning, and 5G. In October, the company unveiled a product called Project Apex, which will let customers manage information and applications across public clouds and their own data centers.
Buy & Hold Grade: A
In terms of proximity to its 52-week high, which is a key factor that our Buy & Hold Grade considers, DELL is well positioned. The stock is currently trading just 0.1% below its 52-week high of $74.82.
As one of the well-established technological companies in the world, DELL has been able to sustain itself amid challenging environments over the years, with a steady execution in its core business. The company’s net revenue has grown at a CAGR of 6.1% over the past three years, while EBITDA increased at a CAGR of 19.9% over the same period.
Peer Grade: A
DELL is currently ranked #2 of 30 stocks in the Technology – Hardware industry. Other popular stocks in the technology-hardware group are HP Inc. (HPQ), Garmin Ltd. (GRMN), and International Business Machines Corporation (IBM).
DELL has comfortably beaten the returns of these popular industry participants over the past year. While HPQ and GRMN have gained 18.9% and 21.2%, respectively, over the past year, IBM lost 6.5% over the same period.
Industry Rank: B
The Technology – Hardware industry is ranked #26 of the 123 StockNews.com industries. The companies in this industry manufacture personal computers, cameras, smart phones, printers, monitors, keyboards, and webcams, among others.
The demand for laptops and smartphones, among other devices, has increased during the pandemic as many companies shifted to ‘work-from-home’ structures. In fact, the percentage of workers around the world that is permanently working from home is expected to double in 2021, which should lead to increased demand in this industry.
Overall POWR Rating: A (Strong Buy)
DELL is rated “Strong Buy” due to its short- and long-term bullishness, solid growth prospects, and underlying industry strength, as determined by the four components of our overall POWR Rating.
DELL has gained 45.4% year-to-date and is expected to keep rising next year based on its continued business growth, favorable earnings and revenue outlook, and strong financials.
DELL’s consensus revenue estimate of $22.29 billion for the quarter ending April 30, 2021 represents 6.9% growth from the same period last year. Its earnings surprise history looks impressive, with the company missing the consensus estimate in just one of the trailing four quarters. The company’s EPS is expected to grow at 17.9% for the quarter ending April 30, 2021. This outlook should keep DELL’s price momentum going in the near term.
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DELL shares were trading at $74.58 per share on Friday afternoon, down $0.13 (-0.17%). Year-to-date, DELL has gained 45.13%, versus a 16.08% rise in the benchmark S&P 500 index during the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...
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