Dell Inc. (NASDAQ: DELL) is set to report earnings after the close, one day before rival Hewlett-Packard Co. (NYSE: HPQ) reports earnings. Dell is expected to report earnings of $0.46 EPS (down from $0.55 a year ago) on a 0.7% sales drop of $14.91 billion in revenue according to Thomson Reuters. For the coming quarter those estimates are $0.50 EPS and $15.42 billion in sales.
The most recent market stabilization and recovery could not have come sooner for Dell (and others). Shares ended April at about $16.50 and the stock hit $14.75 before recently recovering to the $15.07 price today. The 200-day moving average was cut through like butter on the downside over the last two weeks and there were four trading sessions that the 200-day moving average acted as a ceiling on. That level is $15.82 and the 50-day moving average is $16.25 as of today.
Analysts still see upside in Dell with the consensus price target of $19.30 representing about 29% upside to Monday’s closing price. Our big complaint is that Dell has so far refused to pay out a dividend. It has chosen to hold cash for a rainy day and to make acquisitions when possible. Dell also barely trades at 7-times its expected fiscal January-2013 year-end consensus targets from Thomson Reuters.
Options traders appear to be braced for a move of only about $0.60 or just over 4% in either direction based upon the speculative June 2012 put and call options prices.
The big question is no longer just PC sales. Dell has been moving into services and consulting for businesses on top of its enterprise sales. We will be looking forward to how Dell talks about the upcoming Windows 8 launch.
Whispernumber.com sent its whisper number to us today and noted that the whisper is also $0.46 just like the official target. It also noted:
- Last quarter the company reported earnings in-line with the whisper number. Following that report the stock realized a 3.4% gain in five trading days.
- In the comparable quarter last year, the company reported earnings nine cents ahead of the whisper number. Following that report the stock realized an 8.2% loss in five trading days.
JON C. OGG