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Dell Technologies Inc. Disappoints - But DELL Stock Could Still Be a Bargain

Dell Technologies Inc disappointed investors on Aug. 29 with significantly lower adj. free flow for its quarter ending Aug. 2. As a result, the stock has been falling. Nevertheless, its underlying value still looks strong. That could make DELL a bargain here.DELL stock is at $111.26 in midday trading on Tuesday, Sept. 3. That is down from a peak of $149.15 on June 18, but up from a trough of $87.89 on Aug. 7.Moreover, DELL stock could keep floating lower over the next week or so as investors digest the company's earnings. Nevertheless, value investors should carefully review this profitable company's stock, as it may be a bargain.It could be worth over 28% more at $143 per share. Dell Technologies is still producing strong free cash flow, albeit at a lower margin than before. That could propel the stock higher. Let's look into how that works out.That is 28.7% higher than its existing market value of $81.72 billion . In other words, DELL stock is worth at least $143.19 per share .

Dell Technologies Inc. Disappoints - But DELL Stock Could Still Be a Bargain

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{"i18n":{"language":"en_US"},"data":{"magic":2,"id":345541447348272,"tweetId":"345541447348272","gmtCreate":1725389500168,"gmtModify":1725389504227,"author":{"id":4103022840742960,"authorId":4103022840742960,"authorIdStr":"4103022840742960","name":"RexLim","avatar":"https://community-static.tradeup.com/news/5c446f5b976fd917e1981561c73c939b","vip":1,"userType":1,"introduction":"","boolIsFan":false,"boolIsHead":false,"crmLevel":5,"crmLevelSwitch":1,"currentWearingBadge":{"badgeId":"7a9f168ff73447fe856ed6c938b61789-1","templateUuid":"7a9f168ff73447fe856ed6c938b61789","name":"Knowledgeable Investor","description":"Traded more than 10 stocks","bigImgUrl":"https://static.tigerbbs.com/e74cc24115c4fbae6154ec1b1041bf47","smallImgUrl":"https://static.tigerbbs.com/d48265cbfd97c57f9048db29f22227b0","grayImgUrl":"https://static.tigerbbs.com/76c6d6898b073c77e1c537ebe9ac1c57","redirectLinkEnabled":0,"hasAllocated":1,"isWearing":1,"stampPosition":0,"hasStamp":0,"allocationCount":1,"allocatedDate":"2024.01.18","individualDisplayEnabled":0},"individualDisplayBadges":[],"fanSize":1,"starInvestorFlag":false},"themes":[],"images":[],"coverImages":[],"html":"<html><head></head><body><p>Yes ...can be invest after the rate cut</p></body></html>","htmlText":"<html><head></head><body><p>Yes ...can be invest after the rate cut</p></body></html>","text":"Yes ...can be invest after the rate cut","highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"link":"https://ttm.financial/post/345541447348272","repostId":2464338785,"repostType":2,"repost":{"id":"2464338785","pubTimestamp":1725383695,"share":"https://www.laohu8.com/m/news/2464338785?lang=&edition=full","pubTime":"2024-09-04 01:14","market":"us","language":"en","title":"Dell Technologies Inc. Disappoints - But DELL Stock Could Still Be a Bargain","url":"https://stock-news.laohu8.com/highlight/detail?id=2464338785","media":"Barchart","summary":"Dell Technologies Inc  disappointed investors on Aug. 29 with significantly lower adj. free flow  for its quarter ending Aug. 2. As a result, the stock has been falling. Nevertheless, its underlying value still looks strong. That could make DELL a bargain here.DELL stock is at $111.26 in midday trading on Tuesday, Sept. 3. That is down from a peak of $149.15 on June 18, but up from a trough of $87.89 on Aug. 7.Moreover, DELL stock could keep floating lower over the next week or so as investors digest the company's earnings. Nevertheless, value investors should carefully review this profitable company's stock, as it may be a bargain.It could be worth over 28% more at $143 per share. Dell Technologies is still producing strong free cash flow, albeit at a lower margin than before. That could propel the stock higher. Let's look into how that works out.That is 28.7% higher than its existing market value of $81.72 billion . In other words, DELL stock is worth at least $143.19 per share .","content":"<html><body><p><strong>Dell Technologies Inc (</strong><strong>DELL</strong><strong>)</strong> disappointed investors on Aug. 29 with significantly lower adj. free flow (FCF) for its quarter ending Aug. 2. As a result, the stock has been falling. Nevertheless, its underlying value still looks strong. That could make DELL a bargain here.</p>\n<p>DELL stock is at <strong>$111.26 </strong>in midday trading on Tuesday, Sept. 3. That is down from a peak of $149.15 on June 18, but up from a trough of $87.89 on Aug. 7. </p>\n<p>Moreover, DELL stock could keep floating lower over the next week or so as investors digest the company's earnings. Nevertheless, value investors should carefully review this profitable company's stock, as it may be a bargain.</p>\n<figure>\n<img src=\"https://barchart-news-media-prod.aws.barchart.com/EXCLSV/98f7b02a3970c7f055f7e4b576e6f0f3/bbmfnwxxxkjmeinj.png\"/>\n<figcaption>\nDELL stock - Barchart - 9-3-24\n</figcaption>\n</figure>\n<h3><strong>Free Cash Flow Lower But Still Strong</strong></h3>\n<p>It could be worth over 28% more at <strong>$143</strong> per share. Dell Technologies is still producing strong free cash flow, albeit at a lower margin than before. That could propel the stock higher. Let's look into how that works out.</p>\n<p>Last quarter the company's revenue rose 9% to $25.026 billion in the quarter ending Aug. 2. However, its adj. free cash flow (FCF) fell from over $3 billion ($3.05b) to $1.284 billion from a year ago. That's a decline of 58%. In addition, the first half adj. FCF results were similar, falling 49% YoY to $1.9 billion.</p>\n<p>This also means that its FCF margin dropped significantly. For example, last year its Q2 adj. FCF was over 13% of revenue, but now it's down to just over 5%.  This can be seen in the table below.</p>\n<figure>\n<img src=\"https://barchart-news-media-prod.aws.barchart.com/EXCLSV/98f7b02a3970c7f055f7e4b576e6f0f3/9n2v0ghqamh9acdp.png\"/>\n<figcaption>\nDell Technologies - Aug. 29 quarterly report\n</figcaption>\n</figure>\n<p>The point is that the company's cash flow has taken a hit.  This was not the result of higher capex spending. It has to do with lower margins on the company's fundamental products and services.</p>\n<p>Nevertheless, management said during the earnings call they expect growth in the second half of the year. For the full year, they forecasted revenue of $97 billion, 10% higher than last year.</p>\n<p>Moreover, analysts now project $105.14 billion in sales next year, representing 8.4% top-line growth. Therefore, if its adj. FCF margin stays level at 5%, the company could produce $5.26 billion in adj. FCF (i.e., 0.05 x $105.14b).</p>\n<p>That implies that DELL could still be a bargain.</p>\n<h3><strong>What DELL Stock Could Be Worth</strong></h3>\n<p>For example, the market might eventually value the stock with a 5.0% free cash flow yield. Here is what that means. Let's say the company decided to pay out 100% of its adj. FCF in dividends. The market would respond positively to this. It would likely value the stock with at least a 5.0% dividend yield.</p>\n<p>Therefore, DELL stock can be valued using this 5.0% FCF yield metric. Taking the forecast $5.26 billion in adj. FCF for next year and dividing it by 5.0% results in a market capitalization forecast of $105.2 billion (i.e., $5.26b/0.05 = $105.2b).</p>\n<p>That is 28.7% higher than its existing market value of $81.72 billion (i.e., $105.2/$81.72-1 = +0.287). In other words, DELL stock is worth at least <strong>$143.19 </strong>per share (i.e., 1.287 x $111.26 price today).</p>\n<p>Analysts tend to agree that DELL stock is a bargain. For example, Yahoo! Finance reports that 18 analysts have an average price target of $152.10 and Barchart's mean survey is $154.33. These two surveys average $153.22 per share, or 37.7% higher than today's price.</p>\n<p>Moreover, AnaChart.com, a site that tracks analysts who've recently written on the stock, shows an average price target of $130.37 from 17 sell-side analysts. That is still 17% higher than today's price.</p>\n<p>The bottom line is that DELL stock could still be a bargain here, despite its disappointing free cash flow results.</p>\n<h3><strong>Shorting OTM Puts</strong></h3>\n<p>One way to play this is to sell short out-of-the-money (OTM) put options in nearby expiry periods. For example, look at the Sept. 27 put option expiration period, a little over 3 weeks from now.</p>\n<p>It shows that the $105 strike put option strike price, which is 6% below today's spot price, still has a high premium of $2.33 per put contract. That means that a short seller of these puts can make an immediate yield of 2.219% over the next three weeks.</p>\n<figure>\n<img src=\"https://barchart-news-media-prod.aws.barchart.com/EXCLSV/98f7b02a3970c7f055f7e4b576e6f0f3/obcr2clzyqcgxwmj.png\"/>\n<figcaption>\nDELL puts expiring Sept. 27 - Barchart - As of Sept. 3, 2024\n</figcaption>\n</figure>\n<p>This means the investor must buy shares if DELL stock falls to this strike price. But in return, they get to keep the premium income. </p>\n<p>For example, to do this trade the investor secures $10,500 with their brokerage firm. That is enough to buy 100 shares (per put contract) at $105.00, should the stock fall to this price on or before Sept. 27. </p>\n<p>Then, immediately after entering an order to “Sell to Open” 1 put contract at that strike price, the account will receive $233.00. That is why the return on investment is 2.219% (i.e., $233/$10,500). Moreover, over the next quarter, if this play can be repeated, the expected return (ER) is $932 (i.e., $233 x 4), or 8.876% of the $10,500 invested each time.</p>\n<p>That is a very good return. It could help pay for any unrealized losses the investor may have since the stock has declined. Moreover, existing investors in DELL stock can gain all the upside in the stock price, along with this income. In addition, even if DELL stock falls to $105, the investor has a lower breakeven of $105-$2.33, or $102.67 per share, or 7.7% lower than today's price.</p>\n<p>The bottom line is that DELL stock could be a bargain here. One way to play this, especially for existing investors, is to short OTM puts as an income play.</p><br/><br/>More Stock Market News from Barchart \n<ul>\n<li>Ignore Wall Street, Here's How to Invest in Uranium Now</li>\n<li>How to Generate Income Off <a href=\"https://laohu8.com/S/FIVE\">Five Below</a>’s (FIVE) Unusual Options Activity</li>\n<li>3 Top 100 Stocks to Buy Moving Up 20 Spots or More</li>\n<li>Should You Load Up on Nvidia Stock After Earnings?</li>\n</ul> <br/><i> On the date of publication, Mark R. Hake, CFA did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here. </i></body></html>","source":"barchart_highlight","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Dell Technologies Inc. Disappoints - But DELL Stock Could Still Be a Bargain</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nDell Technologies Inc. Disappoints - But DELL Stock Could Still Be a Bargain\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-09-04 01:14 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.barchart.com/story/news/28344589/dell-technologies-inc-disappoints-but-dell-stock-could-still-be-a-bargain><strong>Barchart</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Dell Technologies Inc (DELL) disappointed investors on Aug. 29 with significantly lower adj. free flow (FCF) for its quarter ending Aug. 2. As a result, the stock has been falling. Nevertheless, its ...</p>\n\n<a href=\"https://www.barchart.com/story/news/28344589/dell-technologies-inc-disappoints-but-dell-stock-could-still-be-a-bargain\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"https://media.barchart.com/contributors-admin/common-images/images/Tech%20(Ecommerce%2C%20Social%20Media%2C%20etc.)/Typing%20code%20into%20a%20laptop%20by%20AltumCode%20via%20Unsplash.jpg","relate_stocks":{"BK4200":"专卖店","BK4211":"区域性银行","DELL":"戴尔","BK4515":"5G概念","BK4170":"电脑硬件、储存设备及电脑周边","LU0267386448.USD":"FIDELITY FIRST ALL COUNTRY WORLD \"A\" (USD) INC","BK4535":"淡马锡持仓","FCF":"第一联邦金融","BK4585":"ETF&股票定投概念","FIVE":"Five Below","BK4588":"碎股"},"source_url":"https://www.barchart.com/story/news/28344589/dell-technologies-inc-disappoints-but-dell-stock-could-still-be-a-bargain","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2464338785","content_text":"Dell Technologies Inc (DELL) disappointed investors on Aug. 29 with significantly lower adj. free flow (FCF) for its quarter ending Aug. 2. As a result, the stock has been falling. Nevertheless, its underlying value still looks strong. That could make DELL a bargain here.\nDELL stock is at $111.26 in midday trading on Tuesday, Sept. 3. That is down from a peak of $149.15 on June 18, but up from a trough of $87.89 on Aug. 7. \nMoreover, DELL stock could keep floating lower over the next week or so as investors digest the company's earnings. Nevertheless, value investors should carefully review this profitable company's stock, as it may be a bargain.\n\n\n\nDELL stock - Barchart - 9-3-24\n\n\nFree Cash Flow Lower But Still Strong\nIt could be worth over 28% more at $143 per share. Dell Technologies is still producing strong free cash flow, albeit at a lower margin than before. That could propel the stock higher. Let's look into how that works out.\nLast quarter the company's revenue rose 9% to $25.026 billion in the quarter ending Aug. 2. However, its adj. free cash flow (FCF) fell from over $3 billion ($3.05b) to $1.284 billion from a year ago. That's a decline of 58%. In addition, the first half adj. FCF results were similar, falling 49% YoY to $1.9 billion.\nThis also means that its FCF margin dropped significantly. For example, last year its Q2 adj. FCF was over 13% of revenue, but now it's down to just over 5%.  This can be seen in the table below.\n\n\n\nDell Technologies - Aug. 29 quarterly report\n\n\nThe point is that the company's cash flow has taken a hit.  This was not the result of higher capex spending. It has to do with lower margins on the company's fundamental products and services.\nNevertheless, management said during the earnings call they expect growth in the second half of the year. For the full year, they forecasted revenue of $97 billion, 10% higher than last year.\nMoreover, analysts now project $105.14 billion in sales next year, representing 8.4% top-line growth. Therefore, if its adj. FCF margin stays level at 5%, the company could produce $5.26 billion in adj. FCF (i.e., 0.05 x $105.14b).\nThat implies that DELL could still be a bargain.\nWhat DELL Stock Could Be Worth\nFor example, the market might eventually value the stock with a 5.0% free cash flow yield. Here is what that means. Let's say the company decided to pay out 100% of its adj. FCF in dividends. The market would respond positively to this. It would likely value the stock with at least a 5.0% dividend yield.\nTherefore, DELL stock can be valued using this 5.0% FCF yield metric. Taking the forecast $5.26 billion in adj. FCF for next year and dividing it by 5.0% results in a market capitalization forecast of $105.2 billion (i.e., $5.26b/0.05 = $105.2b).\nThat is 28.7% higher than its existing market value of $81.72 billion (i.e., $105.2/$81.72-1 = +0.287). In other words, DELL stock is worth at least $143.19 per share (i.e., 1.287 x $111.26 price today).\nAnalysts tend to agree that DELL stock is a bargain. For example, Yahoo! Finance reports that 18 analysts have an average price target of $152.10 and Barchart's mean survey is $154.33. These two surveys average $153.22 per share, or 37.7% higher than today's price.\nMoreover, AnaChart.com, a site that tracks analysts who've recently written on the stock, shows an average price target of $130.37 from 17 sell-side analysts. That is still 17% higher than today's price.\nThe bottom line is that DELL stock could still be a bargain here, despite its disappointing free cash flow results.\nShorting OTM Puts\nOne way to play this is to sell short out-of-the-money (OTM) put options in nearby expiry periods. For example, look at the Sept. 27 put option expiration period, a little over 3 weeks from now.\nIt shows that the $105 strike put option strike price, which is 6% below today's spot price, still has a high premium of $2.33 per put contract. That means that a short seller of these puts can make an immediate yield of 2.219% over the next three weeks.\n\n\n\nDELL puts expiring Sept. 27 - Barchart - As of Sept. 3, 2024\n\n\nThis means the investor must buy shares if DELL stock falls to this strike price. But in return, they get to keep the premium income. \nFor example, to do this trade the investor secures $10,500 with their brokerage firm. That is enough to buy 100 shares (per put contract) at $105.00, should the stock fall to this price on or before Sept. 27. \nThen, immediately after entering an order to “Sell to Open” 1 put contract at that strike price, the account will receive $233.00. That is why the return on investment is 2.219% (i.e., $233/$10,500). Moreover, over the next quarter, if this play can be repeated, the expected return (ER) is $932 (i.e., $233 x 4), or 8.876% of the $10,500 invested each time.\nThat is a very good return. It could help pay for any unrealized losses the investor may have since the stock has declined. Moreover, existing investors in DELL stock can gain all the upside in the stock price, along with this income. In addition, even if DELL stock falls to $105, the investor has a lower breakeven of $105-$2.33, or $102.67 per share, or 7.7% lower than today's price.\nThe bottom line is that DELL stock could be a bargain here. One way to play this, especially for existing investors, is to short OTM puts as an income play.More Stock Market News from Barchart \n\nIgnore Wall Street, Here's How to Invest in Uranium Now\nHow to Generate Income Off Five Below’s (FIVE) Unusual Options Activity\n3 Top 100 Stocks to Buy Moving Up 20 Spots or More\nShould You Load Up on Nvidia Stock After Earnings?\n  On the date of publication, Mark R. Hake, CFA did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.","news_type":1},"isVote":1,"tweetType":1,"viewCount":60,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"upFlag":false,"length":32,"xxTargetLangEnum":"ORIG"},"commentList":[],"hasMoreComment":false,"orderType":2}