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What's in Store for Dell Technologies' (DELL) Q4 Earnings?

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Dell Technologies DELL is set to release fourth-quarter fiscal 2020 results on Nov 26.

The Zacks Consensus Estimate for fourth-quarter earnings stayed at $1.97 over the past 30 days, implying a decline of 57% from the year-ago reported figure.

Moreover, the consensus mark for revenues is pegged at $23.96 billion, indicating growth of 0.5% from the number reported a year ago.

For third-quarter fiscal 2020, the company posted non-GAAP earnings of $1.75 per share, which beat the Zacks Consensus Estimate by 15.8%.

Additionally, revenues inched up 1.2% year over year to $22.93 billion, driven by strong growth in storage and commercial. Revenues from VMware VMW, in which Dell has a majority stake, increased 11.4% year over year.

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 are shaping up for this announcement.

Factors to Watch

Dell is expected to have benefited from its dominant position in the enterprise IT solutions market. Strong spending by customers on infrastructure might have been an upside as well. The company is also likely to have gained from the ongoing momentum at VMware.

VMware’s fourth-quarter revenues are expected to have been bumped up by continued enterprise deal wins, dominance in the software-defined data center (SDDC) space and the expanding customer base in cloud.

Additionally, the fourth-quarter top line is expected to reflect Dell’s steady share gain in the PC market. The company was ranked third by Gartner and recorded its eighth consecutive quarter of PC shipment growth in the fourth quarter. The healthy gaming business coupled with a solid commercial-centric product portfolio was a major driver. The company with a market share of 17.4% witnessed the maximum growth rate of 10.7% among all PC vendors, going by IDC data.

Moreover, Dell’s expanding High Performance Computing (HPC) customer base is noteworthy. For instance, University of Queensland is using Dell’s Wiener supercomputer, which built the 14th Generation Dell EMC PowerEdge R740 platform and is supported by NVIDIA’s NVDA Volta-based GPUs.

Further, Dell was selected to power the next-generation supercomputer at the San Diego Supercomputer Center (SDSC), which is expected to be deployed in mid-2020.

However, despite Dell’s expanding portfolio offerings for data centers and HPC, the overall server market weakness is expected to have hurt the company’s top line in the to-be-reported quarter. Notably, the company faces stiff competition in the server market from Hewlett Packard Enterprises HPE, which might have a bearing on the impending quarterly results.

Key Q4 Developments

During the to-be-reported quarter, Dell announced the availability of Latitude 7220 Rugged Extreme tablet, the lightest and the most powerful rugged 12” tablet. The tablet was designed to offer a broad range of connectivity options, including access to FirstNet, which is built with AT&T in a public-private partnership.

Moreover, at Supercomputing 2019, Dell introduced several solutions, reference architectures and portfolio advancements, all designed to simplify and accelerate customers’ HPC and AI efforts.

Further, Dell expanded its enterprise endpoint security portfolio to include VMware Carbon Black Cloud for making organizations more resilient against advanced cyberattacks.

Zacks Rank

Dell currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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