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Dell Technologies (DELL - Free Report) stock is showing considerable relative strength in a weak market environment and is further bolstered by a Zacks Rank #1 (Strong Buy), indicating upward trending earnings revisions.
Dell Technologies is a provider of information technology solutions including servers, storage, and networking products as well as commercial and consumer notebooks, desktop computers and workstations.
In addition to a rebound in PC sales, which seem to have bounced off a bottom, its growth in server sales is being accelerated by the explosion in Artificial Intelligence opportunities. 20% of server orders YTD were AI enabled.
DELL continues to adjust to the technology market’s needs and with a reasonable valuation, and strong price momentum is a worthy investment consideration for any investor’s portfolio.
Earnings Estimates Snap Higher
At the most recent quarterly earnings report Dell Technologies beat analysts estimates by a whopping 54% and marked its sixth consecutive upward earnings surprise. These strong results have prompted analysts to make some significant revisions higher to future earnings expectations, as can be seen in the chart below.
Current quarterly earnings estimates have been revised higher by 8.1% and FY23 earnings estimates have increased by 13.5% over the last two months. EPS are forecast to climb 12% annually over the next 3-5 years.
Image Source: Zacks Investment Research
Strong Stock in a Weak Tape
Since the last Federal Reserve interest rate meeting on September 20, stocks have been reeling, as Fed chair Jerome Powell indicated that he would continue to keep interest rates higher for longer. And while the S&P 500 is down nearly -6% month to date, Dell Technologies shows immense relative strength.
Image Source: TradingView
Furthermore, the price action in DELL stock has been forming a compelling technical chart pattern. The stock has been building out this bull flag consolidation over the last two weeks and if the price can breakout and close above the $70 level, it should make a bull run.
Critical to DELL moving higher in the short term will be how the broad market acts. However, even if there is some market weakness that pulls down DELL stock in the very short term it remains a convincing investment over the medium and long term.
Image Source: TradingView
Reasonable Valuation
Even with double digit earnings growth estimates, and a strong position in its respective market, Dell Technologies trades at a very reasonable valuation. Today, it is trading at a one year forward earnings multiple of 13.1x, which is well below the industry average of 34.5x, and above its three-year median of 10.3x.
DELL also pays a generous dividend yield of 2.1% and raised the payout by 12% over the last year.
Image Source: Zacks Investment Research
Bottom Line
Dell Technologies, with its Zacks Rank #1 (Strong Buy), demonstrates resilience and adaptability in a volatile market, making it a noteworthy investment consideration. The company's innovation in AI-enabled server sales and its rebound in PC sales highlight its potential for sustained growth. Despite broader market uncertainties, its reasonable valuation, strong price momentum, and substantial dividend yield enhance its appeal, making Dell a promising investment for the discerning investor.
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Bull of the Day: Dell Technologies (DELL)
Dell Technologies (DELL - Free Report) stock is showing considerable relative strength in a weak market environment and is further bolstered by a Zacks Rank #1 (Strong Buy), indicating upward trending earnings revisions.
Dell Technologies is a provider of information technology solutions including servers, storage, and networking products as well as commercial and consumer notebooks, desktop computers and workstations.
In addition to a rebound in PC sales, which seem to have bounced off a bottom, its growth in server sales is being accelerated by the explosion in Artificial Intelligence opportunities. 20% of server orders YTD were AI enabled.
DELL continues to adjust to the technology market’s needs and with a reasonable valuation, and strong price momentum is a worthy investment consideration for any investor’s portfolio.
Earnings Estimates Snap Higher
At the most recent quarterly earnings report Dell Technologies beat analysts estimates by a whopping 54% and marked its sixth consecutive upward earnings surprise. These strong results have prompted analysts to make some significant revisions higher to future earnings expectations, as can be seen in the chart below.
Current quarterly earnings estimates have been revised higher by 8.1% and FY23 earnings estimates have increased by 13.5% over the last two months. EPS are forecast to climb 12% annually over the next 3-5 years.
Image Source: Zacks Investment Research
Strong Stock in a Weak Tape
Since the last Federal Reserve interest rate meeting on September 20, stocks have been reeling, as Fed chair Jerome Powell indicated that he would continue to keep interest rates higher for longer. And while the S&P 500 is down nearly -6% month to date, Dell Technologies shows immense relative strength.
Image Source: TradingView
Furthermore, the price action in DELL stock has been forming a compelling technical chart pattern. The stock has been building out this bull flag consolidation over the last two weeks and if the price can breakout and close above the $70 level, it should make a bull run.
Critical to DELL moving higher in the short term will be how the broad market acts. However, even if there is some market weakness that pulls down DELL stock in the very short term it remains a convincing investment over the medium and long term.
Image Source: TradingView
Reasonable Valuation
Even with double digit earnings growth estimates, and a strong position in its respective market, Dell Technologies trades at a very reasonable valuation. Today, it is trading at a one year forward earnings multiple of 13.1x, which is well below the industry average of 34.5x, and above its three-year median of 10.3x.
DELL also pays a generous dividend yield of 2.1% and raised the payout by 12% over the last year.
Image Source: Zacks Investment Research
Bottom Line
Dell Technologies, with its Zacks Rank #1 (Strong Buy), demonstrates resilience and adaptability in a volatile market, making it a noteworthy investment consideration. The company's innovation in AI-enabled server sales and its rebound in PC sales highlight its potential for sustained growth. Despite broader market uncertainties, its reasonable valuation, strong price momentum, and substantial dividend yield enhance its appeal, making Dell a promising investment for the discerning investor.