What happened
Shares of Dell Technologies (NYSE: DELL) slumped 10.3% in February, according to data from S&P Global Market Intelligence. The tech stock saw sell-offs in conjunction with its fourth-quarter earnings release and bearish pressures impacting the broader market
Dell published its fourth-quarter results on Feb. 24, posting sales that came in ahead of the market's targets and earnings that fell short of the average analyst estimate. The company recorded non-GAAP (adjusted) earnings per share of $1.72 on revenue of $28 billion, while the average analyst target had called for adjusted earnings of $1.95 per share on revenue of $27.32 billion.
Image source: Getty Images.
So what
Dell sales climbed 16% year over year in the fourth quarter, and adjusted operating income rose 1% compared to the prior-year period. For the full year, the company's sales grew 17% year over year to reach $101.2 billion thanks to strong growth across business segments and record PC shipments. Adjusted earnings were up 27% annually, reaching $6.22 per share.
Now what
Despite selling pressures impacting the broader market, Dell stock has regained some ground in March. The company's share price is up roughly 3.5% in the month as of this writing.
DELL data by YCharts.
While growth-dependent tech stocks have faced continued bearish pressures early in March, Dell continues to look conservatively valued. The company now has a market capitalization of roughly $39 billion and is valued at approximately 7.6 times this year's expected earnings and less than 40% of this year's expected sales.
Last year, Dell completed the spin-off of its previously held majority ownership position in cloud-computing company VMware, and the company has quickly moved to pass some of the proceeds from the deal along to shareholders. With its fourth-quarter release, management also announced that it was initiating a dividend, with its first quarterly payment coming out to $0.33 per share. Based on the company's current stock price, that suggests a forward yield of roughly 2.5%. It expects to return between 40% and 60% of free cash flow to shareholders in the form of dividends and stock buybacks, and it continues to guide for a long-term compound annual earnings growth rate of 6%.
10 stocks we like better than Dell Technologies Inc.
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now... and Dell Technologies Inc. wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of March 3, 2022
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool owns and recommends Dell Technologies Inc. The Motley Fool recommends VMware. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
