Dell Stock: Dell Exceeds Third Quarter Targets, But Sales Outlook Slight

computer manufacturer Dell Technologies (DELL) beat Wall Street targets for its fiscal third quarter on Monday night on strong sales of servers and other enterprise hardware. Dell stock initially jumped on the news but fell after the company hit a sales low 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. Year-over-year, Dell’s profits rose 39% while sales fell 6%.

For the current quarter, Dell expects to earn adjusted $1.65 per share on sales of $23.5 billion. This is based on the midpoint of its outlook. Analysts were modeling earnings of $1.63 per share on sales of $24.87 billion in the fiscal fourth quarter. Dell’s forecast would result in a 4% year-over-year decline in profits and 16% in sales.

The company’s infrastructure solutions group reported third-quarter revenue of $9.6 billion, up 12% year-over-year. Sales of servers and networking equipment increased 14% to $5.2 billion. And sales of data storage equipment soared 11% to $4.4 billion.

Growth in business equipment sales helped offset the drop in 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 in the stock market today, Dell stock fell 2.1% to 40.23. During Monday’s regular session, Dell stock fell 2.3% to close at 41.07.

“We continue to perform well in any environment, delivering record operating profit and year-to-date revenue growth of 6% to $77 billion,” said Chief Financial Officer Tom Sweet. in a press release.

He added, “We are creating long-term value with strong equity positions in the most profitable segments of the market, generating strong 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.

The IBD Composite Rating is a mix of key fundamental and technical measures to help investors assess a security’s strengths. The best growth stocks have a composite rating of 90 or higher.

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


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