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What's in Store for Dell Technologies' (DELL) Q3 Earnings?

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Dell Technologies (DELL - Free Report) is set to release third-quarter fiscal 2021 results on Nov 24.

For the quarter, the company expects the top line to be seasonally lower, which has typically been flat to down 2% sequentially in previous years.

The Zacks Consensus Estimate for revenues is pegged at $21.93 billion, suggesting a 4% decline from the year-ago reported number.

Further, the consensus mark for quarterly earnings has been steady over the past 30 days at $1.36 per share, suggesting a decline of 22.3% from the year-ago period’s reported figure.

Dell’s earnings beat the Zacks Consensus Estimate in three of the past four quarters, in line with the same in one, the average surprise being 19.1%.

Dell Technologies Inc. Price and EPS Surprise

 

Dell Technologies Inc. Price and EPS Surprise

Dell Technologies Inc. price-eps-surprise | Dell Technologies Inc. Quote

Let’s see how things shaped up prior to this announcement.

Factors to Watch

Dell is expected to have benefited from its dominant position in the enterprise IT-solutions market despite sluggish enterprise spending due to the coronavirus-induced macroeconomic woes.

Markedly, the work-and-learn-from-home necessity has stoked demand for cloud services. Furthermore, the coronavirus-led surge in usage of online and e-commerce services globally has compelled data-center operators to enhance their capacities to accommodate the demand spike for cloud services. This is expected to have benefited Dell in the to-be-reported quarter.

Ongoing momentum at VMware (VMW - Free Report) is also likely to have aided Dell, which has an 81% stake in the former. VMware’s expanding product portfolio is likely to have driven its top line in third-quarter fiscal 2021. Solid adoption of cloud, NSX, vSAN, EUC and security solutions is expected to have driven top-line growth.

However, the third-quarter top line is expected to reflect Dell’s share loss in the PC market despite solid demand for commercial PCs driven by coronavirus-led remote working and online-learning wave. This was primarily due to stiff competition from Lenovo and HP (HPQ - Free Report) . Dell was ranked third by both Gartner and IDC among all PC vendors in their latest third-quarter report. (Read More: PC Sales Continue Benefiting From COVID-19 Pandemic-Led Demand)

Additionally, despite data-center strength, the overall server market weakness is expected to have hurt Dell’s top line in the to-be-reported quarter. Moreover, this Zacks Rank #5 (Strong Sell) company’s top-line growth is expected to have suffered from sluggish on-premise hardware spending as both enterprises and small-medium businesses’ customers delayed or scrapped projects.

Moreover, Dell faces stiff competition in the server market from Hewlett Packard Enterprises (HPE - Free Report) and IBM, which might have a bearing on the impending quarterly results.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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