Is Dell a Buy Despite Potential for Going Private?

February 20, 2013

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E = Equity to Debt Ratio Is Normal

The debt-to-equity ratio for Dell is normal. The balance sheet is in positive territory. Operating cash flow is $3.86 billion.

	Debt-To-Equity	Cash	Long-Term Debt
DELL	0.89	$11.27 Billion	$9.04 Billion
HPQ	1.25	$11.30 Billion	$28.44 Billion

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T = Technicals on the Stock Chart Are Mixed

Dell has performed poorly over a one-year time frame, but year-to-date has been exceptional. Dell has outperformed Hewlett-Packard Company (NYSE:HPQ) and the S&P 500 year-to-date. Dell currently yields 2.30 percent. Hewlett-Packard yields 3.10 percent.

	1 Month	Year-To-Date	1 Year	3 Year
DELL	8.26%	37.08%	-22.23%	4.85%
HPQ	0.18%	20.28%	-40.43%	-64.52%
S&P 500	2.48%	6.86%	14.19%	46.34%

At $13.81, Dell is currently trading above all its averages.

50-Day SMA	11.93
100-Day SMA	10.76
200-Day SMA	11.56

E = Earnings Have Been Inconsistent

Dell has a habit of delivering profits, which is great, but EPS growth has been inconsistent through the years. Revenue had been improving on an annual basis until recently.

	2009	2010	2011	2012	2013
Revenue ($)in billions	61.10	52.90	61.49	62.07	56.90
Diluted EPS ($)	1.25	0.73	1.35	1.88	1.35

When we look at the last quarter on a year-over-year basis, we see a decline in earnings and revenue.

	1/2012	4/2011	7/2012	10/2012	1/2013
Revenue ($)in billions	16.03	14.42	14.48	13.72	14.30
Diluted EPS ($)	0.42	0.36	0.42	0.27	0.30

Let’s take a look at the next page for the Trends and Conclusion. Is this stock an OUTPERFORM, a WAIT AND SEE, or a STAY AWAY?

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