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Dell Technologies (DELL) Moves 6.7% Higher: Will This Strength Last?

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Dell Technologies (DELL - Free Report) shares ended the last trading session 6.7% higher at $98.92. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 3.9% gain over the past four weeks.

The share-price rally accelerated after Dell Technologies announced its plan to spin off its majority stake in VMware in a move to drive additional growth opportunities. The move will create two standalone companies, while making sure to preserve the close partnership between Dell and VMware around technology development, sales and marketing.

The spinoff will provide Dell Technologies cash to reduce its debt load, which was $48.5 billion at the end of fourth-quarter 2020. The company’s core debt stood at $29.2 billion.

Dell Technologies , which owns approximately 80.6% of VMware, will receive a payout between $9.3 and $9.7 billion. As part of the deal, VMware will distribute a special cash dividend of $11.5 billion to $12 billion to shareholders, including Dell Technologies, at the close of the deal which is expected by fourth-quarter 2021.

Price and Consensus

Price Consensus Chart for DELL

This computer and technology services provider is expected to post quarterly earnings of $1.51 per share in its upcoming report, which represents a year-over-year change of +12.7%. Revenues are expected to be $23.33 billion, up 6.5% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Dell Technologies, the consensus EPS estimate for the quarter has been revised 1.9% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on DELL going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>


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