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    Dell Technologies Inc. (DELL) Posts a Record Q1 Fiscal 2023, Affirming its Buy Status

    By Gule Rukhsar

    May 27,2022

    3:49 AM UTC

    2022 so far has been a year full of woes for the Financial markets, with the world still recovering from the pandemic that new throws from all directions came hitting hard. The Russian invasion of Ukraine fueling geopolitical turmoil on top of rising inflation, peaking interest rates, global supply chain constraints, and Covid-19 lockdowns has the markets crashing hard this year. The tech-heavy Nasdaq Composite is squared in the bear market territory while the S&P 500 recently had a near brush with it.

    As of now, both the composites are in the green and taking a sigh of relief as the Fed assured that it is well-equipped to navigate the economy away from a recession. However, the threat of a recession is increasing by the day as interest rates are set to rise further amid the huge inflationary pressure.

    With the year-to-date decline of equities, many strong companies’ stocks are now available at pennies for their value. One such undervalued stock with strong fundamentals and future growth trajectory is the 38-year-old tech giant, Dell Technologies Inc. (DELL). One of the only two PC-makers that managed to increase global shipments despite waning demand post-pandemic, DELL posted upbeat Q1 fiscal 2023 earnings on May 26, 2022. The company smashed first-quarter targets and surpassed estimates on commercial sales growth. Consequently, the stock surged by 10.18% in the pre-market session to trade at a price of $48.40 per share. This uptick came after the stock increased by 1.45% in the prior session at 6.9 million shares.

    DELL’s Performance

    Source: Company Presentation

    DELL has a proven track record of performance over the years, with its Q1 fiscal 2023 being another record quarter following the previous. The quarterly total net revenue rose by 16% YOY to a record $26.1 billion. Analysts were looking ahead to sales of $25.03 billion for the quarter. The infrastructure solutions sales were $9.3 billion (up 16% YOY), and Personal Computer sales were $15.6 billion (up 17% YOY). Commercial PC sales surged by 22% to $12 billion while consumer PC sales inched 3% to $3.6 billion.

    Posting a record operating income of $1.6 billion with an increase of 57%, the non-GAAP operating income was up by 21% to $2.1 billion.

    Furthermore, the net income from continuing operations rose by 62% on a GAAP basis and 36% on a non-GAAP basis. The adjusted diluted earnings amounted to $1.84 per share in the quarter with an uptick of 36% YOY. The earnings also surpassed the consensus estimate of $1.38 per share.

    At the end of the quarter, DELL has the remaining performance obligations of $42 million (up 14%) and deferred revenue of $27.4 billion. Cash and investments totaled $8.5 billion.

    Q2 & Fiscal 2023 Guidance

    For the ongoing Q2 fiscal 2023, DELL provided guidance of adjusted EPS of $1.55-$1.70 with revenues of $26.1-$27.1 billion. Both earnings and revenue are expected to grow 10% YOY at the midpoint of the guidance. On the other hand, analysts had the Q2, fiscal 2023 expectations pegged at EPS of $1.56 on revenues of $26.01 billion.

    Additionally, for the full fiscal year 2023, the company said that it expects diluted non-GAAP EPS growth of 12% or above and revenue growth of roughly 6%. Both Infrastructure Solutions Group (ISG) and Client Solutions Group (CSG) are expected to contribute to the revenue growth. Analysts have polled the full-year estimates at earnings of $6.52 per share on revenues of $104.38 billion.

    DELL’s Valuation

    DELL stock is currently trading very cheap with a 2023 forward price-to-earnings ratio of 7.7. Its forward price-to-sale ratio is 0.3 and its forward FCF yield is 15.7%. With a price target of $94.36 per share, the stock is very much undervalued. Compared to its peers like Apple, Microsoft, and the parent companies of Google and Facebook, DELL is the cheapest by miles.

    With shares down over 21% year to date and attractive valuations, the undervalued stock is very much a buy despite some marking it as a hold.


    With a comprehensive IT solutions portfolio and strong competitive positioning, DELL has once again proved itself with better than forecasted Q1, earnings. The company not only posted a record quarterly earnings but also forecasted upbeat guidance for the ongoing quarter and year. Its valuation implies nearly 88% upside potential and being undervalued at the moment, the stock is a must-buy. The tech giant is poised for much growth in the future as it has kept the positive momentum going with its diverse portfolio of offerings despite a slowdown in PC demand post the pandemic highs.

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