Q1 Preview: Dell (DELL) Could Surprise on Continued Corp. PC Refresh, Cloud


Dell (Nasdaq: DELL) shares are in positive territory Tuesday afternoon heading into the tech giant's first-quarter 2013 report, expected out after the market closes. To access the webcast slated for 5:00pm EDT, click here .

The Street is currently expecting EPS of 46 cents on revs of $14.91 billion. Earnings compare with 51 cents reported for its fourth quarter and 55 cents per share reported in the same period last year.

Shares of Dell moved 5 percent lower to $16.37 at the end of April. By comparison, the stock popped 19 percent higher in the same period last year. Since the start of 2012, Dell is up about 2.8 percent.

Investors might look to peers like Microsoft (Nasdaq: MSFT) or Cisco (Nasdaq: CSCO) for a couple of hints as to how Dell might fare. Microsoft beat views amid better-than-expected Windows sales and licenses (good for Dell). Cisco barely eked out an earnings win with its latest report, but guidance failed to inspire buyers.

Data from Bloomberg has 15 analysts at Buy, 16 with a Hold rating, and two at Sell. The Street's price target average is $19, which ranges from $16 to $21.50. Over the last 52 weeks, Dell has moved in a range of $13.29 to $18.36.

Shares are below the 50-day SMA at $16.25 and 200-day DMA at $15.82. Implied volatility is about 1 percent lower heading into results, though Dell's volatility is 160 percent above its trailing daily average for the last year.

Analyst Comments
  • Goldman Sachs sees revs of $14.88 billion and EPS of 43 cents, both below consensus. The firm commented "investor attention will remain focused on gross margins after Dell reported disappointing gross margins of 21.7% last quarter (below the prior quarter's 23.1%)." Investors will also likely focus on Dell's comments over consumer demand.

    Recent IDC data also points to 2.1 percent downside on PC units for Dell in the recent quarter. Goldman noted IDC data is not directly comparable to Dell since it reports on a calendar-year basis.

  • Deutsche Bank sees revs of $15.0 billion with EPS of 48 cents. Expecting top-line growth to be supported by Enterprise demand offset by softer consumer PC demand. The firm said, "We expect margin upside due to favorable product mix (healthy corporate demand/ softer consumer), greater contribution from Dell's higher margin Storage and Server offerings (i.e. Dell owned IP) and a relatively neutral commodity environment/better HDD supply."

    Deutsche sees a healthy corporate PC upgrade trend based on recent Microsoft data as well as a continued move into cloud storage leading to server strength.

  • Brean Murray Caret & Co. sees EPS of 48 cents. Looking for a better than expected benefit from its shift into higher-end PCs with better ASPs. The company is also garnering more software and warranty revs.

    The firm commented, "We're not yet concerned about April PC demand coming in softer than March because ODM's were expecting it, although we believe Europe has gotten off to a softer than expected May."
Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of their release. You can also check out Dell's past performance at Streetinsider's Dell's Income Statement .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Stocks

Referenced Stocks: CSCO , DELL , MSFT



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