Thoughts?
DELL stock may be an attractive buy due to recent developments & low valuation
Trump administration announced tariff exemptions on tech imports, benefiting companies like Dell
Despite a 30% drop this year, DELL stock trades at ~$87, making it look undervalued
DELL's valuation metrics vs. S&P 500:
- Price-to-sales ratio: 0.6 vs. 2.8
- Price-to-operating income (P/EBIT): 8.9 vs. 21.3
- Price-to-earnings (P/E): 12.1 vs. 21.3
Revenue trends:
- Revenues shrank 1.5% avg over last 3 years (vs. +6.2% for S&P 500)
- Revenues up 8.1% YoY to $96B; last quarter revenues up 7.2% YoY
Profitability concerns:
- Operating margin: 6.5% (vs. 13.1% S&P 500)
- Operating cash flow margin: 4.7% (vs. 15.7% S&P 500)
Financial stability issues:
- Debt: $25B vs. market cap of $58B → poor debt-to-equity of 44.3%
- Cash-to-assets ratio: 4.6% (vs. 15% S&P 500)
Downturn performance:
- DELL performed slightly better than S&P 500 during major crashes like COVID & 2022 inflation
- Fully recovered post-downturns & even peaked at $179.21 in May 2024
Summary performance:
- Growth: Strong
- Profitability: Very Weak
- Stability: Very Weak
- Downturn resilience: Neutral
Overall: Neutral
Positives include $10B share buyback & dividend increase announced last month
Trefis suggests DELL is worth considering for investors comfortable with individual stock risk
For lower volatility, Trefis promotes its High Quality (HQ) Portfolio which has outperformed the S&P 500