has a solid history of positive earnings surprises and has recently had a breakout. The stock is a Zacks #1 Rank (Strong Buy).
Dell Inc. provides integrated technology solutions in the
information technology (IT) industry worldwide. The company sells and supports technology products including laptops, netbooks, tablets, smartphones, desktops PCs, servers and networking products. It also offers storage solutions
comprising storage area networks, network-attached storage,
direct-attached storage, disk and tape backup systems, and
removable disk backup. The company was founded in 1984 and
is headquartered in Round Rock, Texas.
Earnings Surprises Streak
DELL has strung together a sizeable streak of eight straight
positive earnings surprises. There have been some large
beats of late, including a 40% and a 43% beat in October 2010
quarter and the January 2011 quarter respectively.
Interestingly, only the January 2011 beat of 43% resulted in a sizeable 10% positive move for the stock following earnings. A 10% beat for the July 2011 quarter
resulted in an 8% loss for the stock.
Next Earnings Report
Dell is expected to report earnings after the close on
February 21, 2012. The Zacks Consensus Estimate is calling
for revenue of $15.995 billion and EPS of $0.51. Wall
Street has been particularly sharp with topline estimates for
Dell, with the Zacks Consensus Estimate missing the topline
by 2% or less in three of the last four earnings reports.
Aggressive Growth stock investors will surely remember the
name from the explosive growth the stock exhibited in years
gone by, but they will be stunned to learn that this stock
has such a low valuation. At 8X trailing and forward
earnings, DELL trades at a discount to the industry average
for both metrics. Price to book and price to sales also show
DELL is cheap in comparison to the industry average.
A quick look at the price and consensus chart for DELL shows
that analysts have been moving expectations higher
while the stock remains at depressed levels. Given the
number of earnings beats and the relative poor performance
for the stock, the recent breakout for DELL could be the
start of a longer trend for the stock. DELL is a Zacks #1
Rank (Strong Buy).
Brian Bolan is the Aggressive Growth Stock Strategist
Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor