Tags: Dell | ready | second | act

Dell Might Be Ready for a Great Second Act

By    |   Sunday, 15 Apr 2012 12:24 PM

Dell (DELL) might be nearly ready for a great second act, after successive years of stumbles. The online PC sell is expanding into traditional retail channels and competing for global growth, point out analysts, who roundly recommend the stock.

Dell is a global information technology company that sells hardware and IT solutions and services directly and through distribution channels. Born as on online PC retailer to consumers, the company has transformed into a broader technology provider that competes with giants such as IBM (IBM) and Hewlett-Packard (HPQ).

“We are expanding our enterprise solutions, which include servers, networking, and storage offerings. In services, we are adding more capabilities to provide end-to-end technology solutions to our customers, including managed security services focused on threat intelligence and security consulting,” management recently told investors.

“We are also focused on growing our end-user computing business, which includes desktop and mobility offerings. Software is a critical part of enterprise solutions and end-user computing, and we are expanding our capabilities in this business. Since the beginning of fiscal 2011, we have acquired more than 10 companies whose offerings and intellectual property enhance our solutions business.”

Dell divides its global customer base into four segments: large enterprise, public, small and medium business, and consumer. The product range includes notebooks, workstations, tablets, smartphones, and desktop PCs.

Dell management says it will focus on growing revenues in its enterprise segment, as government spending is likely to flag. “We expect that total revenue growth in the first half of fiscal 2013 will be challenging, given the existing weakness in our public segment as well as the uncertain macroeconomic environment,” Dell management said.

Dell is a $28.39 billion market cap stock, well over double the size of its average competitor in the sector of computer and peripheral sales. Its trailing 12-month P/E ratio is 8.5, far below the sector average of 18.15.

Dell has a projected five-year price-to-earnings growth (PEG) ratio of 1.6, compared to 1.07 for the sector. Its projected 12-month earnings per share growth is 3.29 percent, compared to 14.7 percent for its sector.

Analysts in love


Analysts are back in love with this former tech high-flier. The buy calls are raining down from Raymond James, Deutsche Bank, and Citigroup. Only a few of the major institutions consider it a neutral pick and none with current ratings call it sell.

“DELL appears undervalued based on its Price/Sales (TTM) of 0.47, which is less than the Information Technology sector’s bottom quintile value of 0.88,” reported Ned Davis Research on April 8.

Dell next reports on May 22.

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2012-24-15
Sunday, 15 Apr 2012 12:24 PM
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