Why Dell Stock Deserves a Place in Your Portfolio

Dell Technologies (NASDAQ:DELL) stock rose 7% in after-hours trading on Thursday following its results for the first quarter of fiscal 2021. Notably, the quarter ended on May 1, 2020. The computer company posted better-than-expected results in the first quarter. Dell’s top-line and bottom-line numbers beat analysts’ consensus estimates. The company said that the coronavirus outbreak boosted its business operations in some sectors. Dell posted double-digit YoY (year-over-year) growth in its commercial notebook sales and high-single-digit YoY growth in its mobile workstation sales.

Dell’s earnings results for Q1 2021

In the first quarter, Dell reported an adjusted EPS of $1.34 compared to $1.45 in the first quarter of fiscal 2020. The earnings beat analysts’ consensus estimate of $0.92 per share. Dell generated sales of $21.95 billion—a reduction of 0.2% from the first quarter of fiscal 2020. The company beat analysts’ consensus revenue expectation of $20.8 billion.

In the first quarter, Dell’s ISG (Infrastructure Solutions Group) reported revenues of $7.57 billion—a reduction of 7.7% YoY. The company’s CSG (Client Solutions Group) reported revenues of $11.1 billion—a growth of 1.8% YoY. Dell has a majority interest in VMWare (NYSE:VMW), which boosted its revenue. VMware Group reported revenues of $2.76 billion—a growth of 12.1% YoY.

In the first-quarter earnings release, Dell COO Jeff Clarke said, “Customers need essential technology now more than ever to put business continuity, remote working and learning plans into practice.” He added, “In Q1, we saw orders with banking and financial services, government, healthcare and life sciences customers up 15 to 20 percent – all to meet immediate needs of their customers, communities and patients. As the world pivots from response to recovery, we’ll continue to put our broad capabilities to work to deliver differentiated results for our customers and our company.”

Wall Street analysts expect Dell to report an adjusted EPS of $1.23 on revenue of $22.3 billion in the second quarter. Analysts also expect Dell’s revenues to fall by 3.4% YoY in fiscal 2021 to $89.3 billion. The sales could rise by 2.7% YoY in fiscal 2022 to $91.7 billion. The adjusted earnings will likely fall by 30.5% YoY in fiscal 2021 to $5.11 per share. However, the profits could rise by 27.8% YoY to $6.53 per share in fiscal 2022.

Analysts’ recommendations and target price

Among the 17 analysts following Dell stock, eight recommend a “buy,” while nine recommend a “hold.” None of the analysts recommend a “sell.” Wall Street analysts’ mean target price on the stock is $51.76, which implies a 13.6% gain from the current level of $45.58. The consensus target price for the stock has risen from $50.12 in April—a growth of 3.3%.

Most of the analysts revised their target price for Dell stock after its results for the first quarter of fiscal 2021.

  • RBC Capital increased its target price from $42 to $48.
  • Evercore ISI increased its target price from $46 to $54.
  • Credit Suisse increased its target price from $41 to $44.
  • Instinet increased its target price from $35 to $55.
  • Deutsche Bank increased its target price from $52 to $55.

Stock returns

Dell stock rose 0.02% on Thursday and ended the day at $45.58. At this closing price, the company’s market cap is $33.7 billion. Notably, the stock is trading 26.7% below its 52-week high of $62.16 and 78.7% above its 52-week low of $25.51.

Based on the closing price on Thursday, Dell stock was trading 6.6% above its 20-day moving average of $42.77. The stock is also trading 13.0% above its 50-day moving average of $40.33 and 4.3% above its 100-day moving average of $43.69. Dell’s 14-day relative strength index number is 62. The number indicates that the stock is near the overbought zone.

Dell stock has a middle Bollinger Band level of $42.77, while its lower Bollinger Band level is $39.35. On Thursday, Dell stock closed near its upper Bollinger Band level of $46.20, which suggests that it’s overbought.

On Thursday, Intel (NASDAQ:INTC) and HP (NYSE:HPQ) returned -2.9% and -12.3%, respectively. The S&P 500 and the Dow Jones Industrial Average returned -0.21% and -0.58%, respectively. Read S&P 500 Valuation: Are Investors Paying Too Much for Too Little? to learn more.