In This Article:
Dell Technologies Inc. (NYSE:DELL) saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Dell Technologies’s outlook and value based on the most recent financial data to see if the opportunity still exists.
See our latest analysis for Dell Technologies
What's the opportunity in Dell Technologies?
Good news, investors! Dell Technologies is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 18.62x is currently well-below the industry average of 23.85x, meaning that it is trading at a cheaper price relative to its peers. What’s more interesting is that, Dell Technologies’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move closer to its industry peers, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
What does the future of Dell Technologies look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a relatively muted profit growth of 5.3% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Dell Technologies, at least in the short term.
What this means for you:
Are you a shareholder? Even though growth is relatively muted, since DELL is currently trading below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current price multiple.
Are you a potential investor? If you’ve been keeping an eye on DELL for a while, now might be the time to make a leap. Its future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy DELL. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed assessment.