Dell Stock: Dell Beats Q3 Targets But Sales Outlook Light

Computer maker Dell Technologies (DELL) late Monday beat Wall Street’s targets for its fiscal third quarter thanks to strong sales of servers and other enterprise hardware. Dell stock initially surged on the news but fell after the company guided low for sales in the current period.


The Round Rock, Texas-based company earned an adjusted $2.30 a share on sales of $24.72 billion in the quarter ended Oct. 28. Analysts polled by FactSet had predicted Dell earnings of $1.60 a share on sales of $24.37 billion. On a year-over-year basis, Dell earnings rose 39% while sales fell 6%.

For the current quarter, Dell expects to earn an adjusted $1.65 a share on sales of $23.5 billion. That’s based on the midpoint of its outlook. Analysts were modeling earnings of $1.63 a share on sales of $24.87 billion in the fiscal fourth quarter. Dell’s guidance would translate to year over year declines of 4% in earnings and 16% in sales.

The company’s Infrastructure Solutions Group delivered third-quarter revenue of $9.6 billion, up 12% year over year. Sales of servers and networking gear rose 14% to $5.2 billion. And data storage equipment sales climbed 11% to $4.4 billion.

Sales growth in enterprise gear helped offset slumping PC sales. Dell’s Client Solutions Group reported a 17% drop in sales to $13.8 billion.

Dell Stock Drops After Report

In after-hours trading on the stock market today, Dell stock fell 2.1% to 40.23. During the regular session Monday, Dell stock sank 2.3% to close at 41.07.

“We continue to perform well in any environment, driving record operating income and growing revenue 6% year-to-date to $77 billion,” Chief Financial Officer Tom Sweet said in a news release.

He added, “We’re creating long-term value with strong share positions in the most profitable parts of the market, generating solid free cash flow over time and returning capital to shareholders.”

Dell stock ranks third out of 13 stocks in IBD’s computer hardware and peripherals industry group, according to IBD Stock Checkup. But it has a lackluster IBD Composite Rating of 55 out of 99.

IBD’s Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock’s strengths. The best growth stocks have a Composite Rating of 90 or better.

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.


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