Dell Technologies DELL
What does Dell Technologies do?
Dell Technologies develops, manufactures and sells computer hardware, infrastructure solutions and related services for businesses, public institutions and consumers worldwide. The business is divided into two segments: The Infrastructure Solutions Group (ISG) includes servers, among them systems designed for artificial intelligence, as well as storage solutions, hyperconverged infrastructure and networking products. The Client Solutions Group (CSG) covers notebooks, desktop PCs, workstations, monitors and accessories.
Revenue comes predominantly from hardware sales, complemented by support, maintenance and financing services that contribute recurring revenue. In terms of competitive position, Dell is one of the world's largest providers of PCs and servers and competes with HP, Lenovo, Hewlett Packard Enterprise and Supermicro, among others. Its strengths lie in direct sales to large customers, a broad product range from a single source, and an extensive supply chain and service structure. At the same time, the business has low margins and depends heavily on suppliers.
Score profile
Rank vs. Computer Hardware (11 companies). 10 = top of the group, 5 = middle. Calculated from the metrics below, without AI.
Metrics compared with the industry
On profitability and quality, Dell Technologies ranks in the middle in the group Computer Hardware (4.2/10). On growth, the company ranks above average in the group Computer Hardware (7.2/10). On valuation (higher = cheaper), the stock ranks above average in the group Computer Hardware (6.0/10). On financial strength, Dell Technologies ranks in the middle in the group Computer Hardware (5.8/10).
| Metric | Stock | Group median | Ranking |
|---|---|---|---|
| Forward P/E | 11.0x | 10.0x | better than 45 % |
| Trailing P/E | 19.4x | 19.4x | better than 50 % |
| PEG ratio | 0.3x | 1.0x | better than 81 % |
| EV/EBITDA | 13.8x | 16.8x | better than 65 % |
| Price/sales | 1.4x | 1.4x | better than 50 % |
| Revenue growth | 57.7% | 55.5% | better than 59 % |
| Earnings growth | 272.9% | 50.5% | better than 85 % |
| Gross margin | 19.9% | 50.4% | better than 23 % |
| Operating margin | 12.0% | 9.6% | better than 59 % |
| Net margin | 7.5% | 6.8% | better than 59 % |
| Return on equity | 0.0% | 17.7% | better than 27 % |
| Debt/equity | 0.0% | 9.9% | better than 86 % |
| Current ratio | 1.0x | 1.6x | better than 23 % |
| Free cash flow yield | 2.8% | 2.6% | better than 65 % |
| Dividend yield | 0.8% | 0.7% | – |
| Payout ratio | 13.4% | 14.5% | – |
| Beta | 1.44 | 1.73 | – |
Valuation: what is Dell Technologies worth?
Two valuation approaches – a discounted cash flow model and a valuation at the industry’s median multiples – give Dell Technologies a model range of 270.27 USD to 419.40 USD per share.
25 analysts, average rating “Buy”, average price target 590.00 USD (+76.6%).
The full DCF matrix, the reverse DCF (what growth the price implies) and scenarios are part of the Pro analysis.
What the business depends on
- Demand for servers and storage systems depends heavily on companies' investment in data centers and AI infrastructure.
- PC sales follow replacement cycles among corporate and consumer customers as well as the economic and consumer environment.
- Service, support and financing offerings stabilize revenue and strengthen customer loyalty beyond hardware sales.
Risks
- The industry is characterized by intense price competition, which can weigh on the already limited margins in the hardware business.
- Fluctuating prices and shortages of key components such as processors, graphics chips and memory can affect costs and delivery capability.
- Substantial debt and dependence on cyclical IT budgets increase vulnerability in downturns.
What to look for with Dell Technologies
The operating margin by segment is particularly informative, as it shows whether growth in servers and PCs is actually profitable or is only bought through price discounts.