Bull of the day: Dell Technologies
Dell Technologies DELL is an IT solutions provider. The Company’s operating segments include Client Solutions, Enterprise Solutions Group and Dell Software Group.
Breakdown of segments
The Company’s Client Solutions segment includes sales to commercial and consumer customers of desktop computers, thin clients, laptops and third-party software and peripherals from Client Solutions Hardware.
Dell’s enterprise solutions group includes servers, networking, storage, services, third-party software and ESG hardware peripherals.
The Dell Software Group segment includes systems management, security software solutions and information management software offerings.
Share performance
Equities have held up relatively well since the start of the year, falling around 15% and outperforming the broader market by a small margin.
Image source: Zacks Investment Research
Over the past year, the situation has remained the same: DELL stocks have slightly outperformed the S&P 500.
Image source: Zacks Investment Research
The company’s stock performance is inspiring – many companies have seen deep double-digit valuation declines throughout 2022. Additionally, stock performance tells us that stocks have provided investors with a valuable defensive mix. .
Quarterly performance and valuation
Dell has consistently reported strong quarterly results, beating bottom line estimates in eight of its past ten quarters. Over the past four quarters, the information technology solutions provider has beaten net income by 8% on average, and in its latest quarterly report, DELL smashed net income estimates by 33%.
The company sports an extremely low forward earnings multiple of 8.2X, a far cry from 2018 highs of 17.5X and well below the five-year median of 10.0X. Additionally, the value represents a steep 53% discount to the S&P 500 forward P/E ratio of 17.4X.
DELL sports a style score of an A for value.
Image source: Zacks Investment Research
Expected growth
Analysts have revised their quarterly estimates positively over the past 60 days, no doubt a major positive and a reason the company sports the coveted Zacks Rank #1 (Strong Buy). For the current year, the consensus estimate trend was up 6%, reflecting annual earnings of $7.04 per share, a substantial 14% year-over-year increase.
In addition, going forward, the EPS estimate of $7.62 for the next fiscal year allows DELL to increase earnings by a respectable 8.2% year-over-year.
On the sales side, the revenue estimate of $107 billion for FY23 shows marginal revenue growth of 0.3%, and for FY24 the estimate of $108 billion dollars reflects an additional 1.5% revenue growth.
Image source: Zacks Investment Research
Dividends
Dell Technologies rewards its shareholders through its 2.7% annual dividend yield with a sustainable payout ratio of 17% of earnings. The annual return is well above the 1.5% return of the S&P 500, and the company has increased its dividend once in the past five years.
Dividends are a significant boost to any portfolio, providing an income stream that can mitigate drawdowns within a portfolio.
Conclusion
One of the best ways for investors to find expected winners in the market is to use the Zacks Rankings, one of the most powerful market tools. A portfolio of Zacks Rank #1 (Strong Buy) stocks has beaten the market for 26 of the past 31 years with an average annual return of 25%.
Additionally, the richest 5% of all stocks receive the coveted Zacks Rank #1 (Strong Buy). These stocks are expected to outperform the market more than any other rank.
Dell Technologies would be a great bet for investors looking to add a strong stock to their portfolios, as evidenced by its Zack Rank #1 (Strong Buy).
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Dell Technologies Inc. (DELL): Free Inventory Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.