Boasting a solid market cap of $63.82 billion, Dell Technologies Inc. (DELL), a leading player in the computer hardware industry, is slated to disclose its fiscal 2024 fourth-quarter and full-year results on Thursday, February 29, 2024.

Wall Street forecasts DELL to report revenue of $22.17 billion, signaling an 11.5% year-over-year decline. While its EPS for the same quarter is projected to witness a 4.4% year-over-year drop, reaching $1.72. However, the company has consistently outperformed its earnings estimates in each of the trailing four quarters, showcasing its strong track record of exceeding its EPS expectations.

Moreover, in recent months, DELL has initiated a string of partnerships with major players in the field of Artificial Intelligence (AI) to bolster its position and expertise in the rapidly evolving AI landscape.

For instance, last year in December, DELL teamed up with NVIDIA Corporation (NVDA) with the goal of driving progress in enterprise data storage, providing its customers with enhanced AI and generative AI capabilities by utilizing the NVIDIA DGX SuperPOD AI infrastructure.

Meanwhile, last year, October witnessed DELL collaborating with Meta Platforms, Inc. (META), aimed at simplifying the deployment of META’s Llama 2 models for DELL’s customers.

This partnership integrates META’s cutting-edge technology with DELL’s comprehensive generative AI portfolio, spanning IT infrastructure, client devices, and professional services, making it more accessible for businesses to implement advanced AI solutions on their premises.

On top of it, DELL unveiled its family of premium devices, with the introduction of brand new XPS 16 and XPS 14 on January 4, 2024. These devices come equipped with built-in AI capabilities, NVIDIA GeForce GPUs, and the latest Intel Core Ultra processors. Additionally, the XPS portfolio features Microsoft Copilot in Windows 11, leveraging AI capabilities to streamline everyday tasks, making them more efficient and effortless. 

Analysts at the Bank of America Corporation (BofA), ahead of the company's earnings release on February 29, highlighted DELL’s recent disclosure of its robust data center revenues and emphasized sustained strong demand in the AI sector, which is expected to endure for years.

Furthermore, BofA analysts believe that despite the slower-than-expected recovery of the overall PC market, DELL is poised to reap benefits in the latter part of this year with the introduction of AI-enabled PCs. Encouraged by these prospects, the bank revised DELL’s price target upward to $98 per share from $82.

In terms of price performance, DELL’s shares have jumped 114.9% over the past year and 94.9% over the past nine months to close the last trading session at $90.35.

Here are the fundamental aspects of DELL that could influence its performance in the near term:

Strong Financials

For the fiscal 2024 third quarter, which ended on November 3, 2023, DELL’s total revenue amounted to $22.25 billion, while its total operating expenses declined 7.2% year-over-year to $3.66 billion. During the same quarter, the company’s attributable net income improved 310.6% from the prior-year quarter to $1 billion. Also, its EPS came in at $1.36, up 312.1% from the year-ago value.

Discounted Valuation

In terms of forward non-GAAP P/E, DELL is trading at 13.57x, 46.1% lower than the industry average of 25.16x. Likewise, its forward EV/EBITDA multiple of 8.23 is 46.4% lower than the industry average of 15.37x. Also, its forward EV/EBIT ratio of 11.14x is 45.2% lower than the industry average of 20.31x.

Robust Profitability

DELL’s trailing-12-month asset turnover ratio of 1.08x is 76% higher than the 0.61x industry average. Its trailing-12-month Return On Total Capital (ROTC) of 12.32% is 401.4% higher than the industry average of 2.46%. Furthermore, the stock’s trailing-12-month cash per share of $11.61 is 482.3% higher than the $1.99 industry average.

POWR Ratings Exhibit Solid Prospects

DELL’s robust fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, translating to a Buy in our proprietary rating system. The POWR Ratings are calculated by accounting for 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. DELL has a B grade for Growth, which is justified by its strong financial performance in the third quarter. Meanwhile, the stock’s B grade for Value is in sync with its lower-than-industry valuation metrics.

Furthermore, its A grade for Momentum is consistent with its share price trading above its 200-day moving average of $65.13 and 50-day moving average of $80.08, indicating an uptrend.

Within the A-rated Technology - Hardware industry, DELL is ranked #13 out of the 36 stocks.

Beyond what we’ve stated above, we have also rated the stock for Stability, Sentiment, and Quality. Get all DELL ratings here.

Bottom Line

Despite Wall Street's conservative estimates for the fourth quarter, DELL’s prospects shine brightly, fueled by its strategic initiatives to seize opportunities in the burgeoning AI landscape and its solid fundamentals.

Furthermore, with BoFA analysts forecasting a strong year for the company, driven by its innovative product offerings, such as the AI-enabled PCs launched earlier in the year, it might be an opportune time to consider owning shares of DELL.

How Does Dell Technologies Inc. (DELL) Stack Up Against Its Peers? 

While DELL has an overall grade of B, equating to a Buy rating, you may also check out these other stocks within the Technology - Hardware industry: AstroNova, Inc. (ALOT), HP Inc. (HPQ), and Lantronix, Inc. (LTRX), carrying A (Strong Buy) ratings. To explore more Technology - Hardware stocks, click here.  

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DELL shares were trading at $92.63 per share on Monday morning, up $2.28 (+2.52%). Year-to-date, DELL has gained 21.63%, versus a 6.90% rise in the benchmark S&P 500 index during the same period.

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