Dell Technologies Inc.

Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Dell Technologies Inc. (NYSE: DELL) is engaged in designing, developing, manufacturing, marketing, selling, and supporting a wide range of comprehensive and integrated solutions, products, and services. The Company operates in two segments: Infrastructure Solutions Group (ISG) and Client Solutions Group (CSG). 

Kalkine’s American Tech Report covers the Company Overview, Key positives & negatives, Investment summary, Key investment metrics, Top 10 shareholding, Business updates and insights into company recent financial results, Key Risks & Outlook, Price performance and technical summary, Target Price, and Recommendation on the stock.

Price Performance:

• DELL's share price has corrected by 22.92% in the past three months. On the other hand, in the long term, the stock has given a mere return of 1.94% over the past six months.
• The stock is leaning towards the lower band of its 52-week range of USD 179.70 and 52-week low price of USD 80.49, with the current price inside an important support area of USD 100- USD 110, therefore an expectation of upward movement if the levels sustain.
• The price is currently below both its short-term (50-day) SMA and long-term (200-day) SMA, with the current RSI of 32.85, nearing oversold zone, with expectations of upward movement.

1.2 The Key Positives, Negatives, and Investment summary   

1.3 Top 10 shareholders:

The top 10 shareholders together form ~38.48% of the total shareholding, signifying concentrated shareholding. Dell (Michael S), and The Vanguard Group, Inc., are the biggest shareholders, holding the maximum stake in the company at ~10.02% and ~7.02%, respectively.

1.4 Key Metrics:

Dell's Q3 FY25 performance compared to Q3 FY24 reveals a mixed financial picture with both challenges and improvements. The gross profit margin declined from 23.14% to 21.78%, suggesting rising cost pressures or pricing challenges; however, the slight uptick in EBITDA margin from 10.44% to 10.58% and the operating margin improvement from 6.75% to 7.44% indicate enhanced operational efficiency. Despite the income tax rate increasing from 14.92% to 19.04%, the income before tax margin improved from 5.30% to 5.71%, resulting in a modest net margin rise from 4.51% to 4.63%. A key concern is the substantial drop in free cash flow yield, which fell sharply from 13.79% to 2.98%, signaling potential issues in cash generation. On a positive note, Dell has significantly boosted its capital efficiency, as evidenced by an increase in return on average total assets from 3.14% to 4.94% and a remarkable rise in return on invested capital from 15.86% to 23.45%, demonstrating improved effectiveness in utilizing its asset base and invested capital to drive profitability.

Section 2: Business Updates and Financial Highlights

2.1 Recent Updates:

The below picture gives an overview of the recent updates:

 2.2 Insights of Q3FY25:

Section 3: Key Risks and Outlook:

Section 4: Stock Recommendation Summary:

4.1 Technical Summary:

 Price Performance:

• DELL's share price has corrected by 22.92% in the past three months. On the other hand, in the long term, the stock has given a mere return of 1.94% over the past six months.

• The stock is leaning towards the lower band of its 52-week range of USD 179.70 and 52-week low price of USD 80.49, with the current price inside an important support area of USD 100- USD 110, therefore an expectation of upward movement if the levels sustain.
• The price is currently below both its short-term (50-day) SMA and long-term (200-day) SMA, with the current RSI of 32.85, nearing oversold zone, with expectations of upward movement.

4.2 Fundamental Valuation

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is February 03, 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: The report publishing date is as per the Pacific Time Zone.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

 Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

 Stop-loss: It is a level to protect against further losses in case of unfavorable movement in the stock prices.