Dell Technologies Inc. (NYSE: DELL)

Sector: Technology Industry: Computer Hardware CIK: 0001571996
Market Cap 86.37 Bn
P/B -32.96
P/E 16.20
P/S 0.83
ROIC (Qtr) 21.53
Div Yield % 1.60
Rev 1y % (Qtr) 10.83
Total Debt (Qtr) 31.24 Bn
Debt/Equity (Qtr) -11.92

About

Dell Technologies Inc., known as Dell, is a multinational technology company operating in the IT infrastructure industry. The company's headquarters are in Round Rock, Texas, and it was established in 1984 by Michael Dell. Dell is a global leader in the provision of IT infrastructure, including servers, storage, and networking equipment, as well as software and services. Dell's primary business activities revolve around the design, development, and manufacturing of a wide range of IT infrastructure products and client devices. The Infrastructure...

Read more

Price action

Investment thesis

Bull case

  • Robust free cash flow of 4.45B exceeds capital expenditure of 2.65B by 1.68x, indicating strong organic growth funding capability.
  • Cash reserves of 9.57B provide ample 17.95x coverage of acquisition spending 533M, enabling strategic growth opportunities.
  • Strong free cash flow of 4.45B provides 8.35x coverage of acquisition spending 533M, indicating disciplined M&A strategy.
  • Strong tangible asset base of 63.49B provides 119.12x coverage of acquisition spending 533M, enabling strategic growth.
  • Cash reserves of 9.57B exceed inventory value of 6.95B by 1.38x, indicating strong liquidity and inventory management.

Bear case

  • Operating cash flow of 7.10B barely covers its investment activities of (2.04B), with a coverage ratio of -3.48, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (2.04B) provide weak support for R&D spending of 3.12B, which is -0.65x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of 7.10B provides thin coverage of dividend payments of (1.42B) with a -4.98 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Operating cash flow of 7.10B provides insufficient coverage of deferred revenue obligations of 25.11B, which is 0.28x, raising concerns about future service delivery capabilities.
  • Operating earnings of 7.37B show weak coverage of depreciation charges of 3.03B, with a 2.43 ratio indicating high capital intensity and potential reinvestment needs.

Peer comparison

Companies in the Computer Hardware
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ANET Arista Networks, Inc. 164.72 Bn 49.07 19.50 0.00 Bn
2 DELL Dell Technologies Inc. 86.37 Bn 16.20 0.83 31.24 Bn
3 WDC Western Digital Corp 60.34 Bn 23.73 5.03 4.68 Bn
4 STX Seagate Technology Holdings plc 58.67 Bn 34.25 6.14 4.99 Bn
5 SNDK Sandisk Corp 34.41 Bn -19.78 4.42 1.35 Bn
6 PSTG Pure Storage, Inc. 21.84 Bn 167.52 6.27 0.23 Bn
7 HPQ Hp Inc 21.10 Bn 8.34 0.38 9.67 Bn
8 SMCI Super Micro Computer, Inc. 17.45 Bn 22.01 0.83 4.78 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.22 2.06
EV to Cash from Ops. EV/CFO 15.07 -0.65
EV to Debt EV to Debt 3.42 56.37
EV to EBIT EV/EBIT 14.52 2.89
EV to EBITDA EV/EBITDA 10.29 -1.74
EV to Free Cash Flow [EV/FCF] EV/FCF 24.03 -7.44
EV to Market Cap EV to Market Cap 1.24 7.64
EV to Revenue EV/Rev 1.03 78.30
Price to Book Value [P/B] P/B -32.96 -28.73
Price to Earnings [P/E] P/E 16.20 6.39
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 3.74 1.25
Dividend Payout Ratio % Div Payout % (Qtr) 26.10 12.30
Dividend per Basic Share Div per Share (Qtr) 2.03 0.27
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 30.60 7.93
Interest Coverage Int. cover (Qtr) 9.44 -105.42
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -0.11 -11.38
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 83.14 867.36
Dividend Growth (1y) % Div 1y % (Qtr) 17.73 4.71
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 7.39 -189.41
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 16.02 -40.76
EBIT Growth (1y) % EBIT 1y % (Qtr) 27.29 -117.00
EBT Growth (1y) % EBT 1y % (Qtr) 43.75 -116.68
EPS Growth (1y) % EPS 1y % (Qtr) 25.12 -70.06
FCF Growth (1y) % FCF 1y % (Qtr) 57.49 712.64
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 3.39 34.90
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.19 0.80
Cash Payout Ratio Cash Payout (Qtr) 0.15 0.06
Cash Ratio Cash Ratio (Qtr) 0.19 7.26
Current Ratio Curr Ratio (Qtr) 0.85 13.59
Debt to Equity Ratio Debt/Equity (Qtr) -11.92 -3.57
Interest Cover Ratio Int Coverage (Qtr) 9.44 -105.42
Times Interest Earned Times Interest Earned (Qtr) 9.44 -105.42
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 10.00 -629.92
EBIT Margin % EBIT Margin % (Qtr) 7.08 -683.67
EBT Margin % EBT Margin % (Qtr) 6.33 -687.58
Gross Margin % Gross Margin % (Qtr) 20.90 34.79
Net Profit Margin % Net Margin % (Qtr) 5.10 -692.43