Dell’s Q3 earnings smashes estimates

Dell Technologies Inc. (NASDAQ: DELL), the American multinational computer technology company released its third-quarter earnings for fiscal 2022. The company disclosed its earnings on November 23, 2021 after the closing bell.

Here is an overview of the quarterly results-

  • Revenue: $28.4 billion vs $27.36 billion expected
  • EPS: $4.87 adjusted vs $2.33 expected
  • Net Income: $3.9 billion

Financial Highlights

  • The company generated record revenue of $28.4 billion, up 21%, driven by growth in all business units, customer segments and geographies, as well as broad strength across commercial PCs, servers and storage.
  • Operating income was a third quarter record of $1.3 billion, a 19% increase over the same period the prior year, and non-GAAP operating income was a third quarter record of $2.9 billion, up 5%.
  • Net income was $3.9 billion, non-GAAP net income was $2.0 billion and adjusted EBITDA was $3.4 billion.
  • Net cash from operating activities was $3.3 billion.
  • Diluted earnings per share was $4.87, up 351% and non-GAAP diluted earnings per share was $2.37, up 17%.

CFO’s Statement

“We continue to deliver strong results, with more than $13 billion in cash flow from operations on a trailing-twelve-month basis. The digital trends are tailwinds for our business, and along with our strategy and financial flexibility, lead us to be optimistic about our long-term growth prospects.”

said Tom Sweet, chief financial officer, Dell Technologies

Analysts Estimate

The Zacks Consensus Estimate for earnings per share (EPS) was pinned at $2.33. The estimated figure was constant since past 60 days. Further, suggested a modest growth of 14.78% year-over-year. The estimate also indicated a slight growth of 3.86% than that of the last quarter. The revenue estimate was $27.36 billion, that suggested a modest growth of 16.33% year-over-year.

The Earnings Expected Surprise Prediction for Dell was pegged at -2.44%. The negative figure clearly indicated that Zacks didn’t expect the company to meet its estimates let alone surpassing it.

Earnings History

Dell reported second-quarter earnings and revenue for fiscal 2022 on August 26, 2021. Revenue was up 15% to $26.1 billion. Additionally, the company generated operating income of $1.4 billion, a 21% increase over the same period in the prior year, and a second quarter record non-GAAP operating income of $2.8 billion, up 7%. Net income was $0.9 billion, non-GAAP net income was $1.9 billion and adjusted EBITDA was $3.3 billion. Net cash from operating activities was $1.7 billion. Also, Diluted earnings per share was $1.05, down 23% and non-GAAP diluted earnings per share was $2.24, up 17%.

It reported first-quarter earnings and revenue on May 27, 2021. Revenue was up 12% to $24.5 billion. In addition, the company generated operating income of $1.4 billion, a 96% increase over the same period in the prior year, and non-GAAP operating income of $2.7 billion, up 26%. Net income was $938 million, non-GAAP net income was $1.8 billion and adjusted EBITDA was $3.2 billion. Net cash from operating activities was $2.2 billion. Also, Diluted earnings per share was $1.13, up 495% and non-GAAP diluted earnings per share was $2.13, up 59%.

Future Earnings Forecast

Analysts estimate the earnings per share for Dell to be $1.76. This indicates a huge decline of 34.81% year-over-year. Further, the Earnings Expected Surprise Prediction is pegged at -14.27%, which indicates that the consensus wants the company report a much broadened decline compared to the estimate. The revenue is estimated at $25.90 billion, which also indicates a slight decline of 0.95% year-over-year.

The Annual Estimate for fiscal 2022 earnings per share is pinned at $8.73. It suggests a midest growth of 9.13% from the year-ago quarter. The estimated revenue for the year is $104.79 billion. It also indicates a modest growth of 11.13% year-over-year.

Stock Performance

Dell’s stocks have not been performing well recently. Today its stocks opened at $54.89 and closed at $54.87, down by 0.83%. Also the downtrend is continuing since last week. Yesterday, the stocks opened at $55.33 and closed at $55.13, again showing a decline of 0.36%. The declines are not major, however, it indicates a stagnant stock growth. Moreover, the share prices have been declining since a almost a week now. The stock rank at Zacks is #5 or ‘Strong sell’ which confirms its bearish stock trend.

The current market capitalization of Dell is valued more than $41.9 billion. As of now, bullish investors should not look forward to buying its shares. However, the bearish investors can take their turn.

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