Q3 Preview: Analysts Look Past Results to Guidance in an Effort to Value Dell (DELL)
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Price: $120.20 -0.36%
Rating Summary:
22 Buy, 14 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 11 | New: 14
Rating Summary:
22 Buy, 14 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 11 | New: 14
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Shares of Dell (NYSE: DELL) are trading slightly up on the day to $15.35 as the company is expected to report its third quarter fiscal 2012 results tonight following the closing bell. The third quarter conference call is scheduled for 4:00 pm EST.
The Wall Street consensus has Dell reporting earnings of $0.47 per share for the quarter on $15.65 billion in sales. For the fiscal year 2012, the consensus estimate is EPS of $2.01 and $62.56 billion in total sales. For the third quarter 2011, the company reported earnings of $0.45 per share on $15.39 billion in total sales.
Analysts rate shares of Dell with 20 Buy ratings, 13 Hold ratings, and 5 Sell ratings. The average price target on shares of DELL is $17.30, and range from $9.25 to $25.
Analysts at JPMorgan forecast Dell will meet or beat expectations for the quarter, but are maintaining their Underweight rating. The firm currently has a price target of $17.50 on the shares. For the quarter, JPMorgan estimates $0.48 per share in earnings on $15.81 billion in sales. For gross and operating margins, the firm forecasts 22.4 percent and 7.6 percent. They believe that the growth over the quarter will be driven by a higher-quality revenue mix and favorable component cost environment.
For the fourth quarter, the firm is expecting weak guidance due to macro uncertainties and notes that it may even be below its estimates of $0.47 per share in earnings and $16.52 billion in sales. Gross margin may fall over the quarter as a result of rising HDD prices.
An analyst at JPMorgan comments, "We still need to see more than just gross and operating margin improvements to become constructive on the stock. Specifically, we are looking for above-peer revenue and profit growth potential. In the interim, though, the stock could become attractive to opportunistic investors looking to take advantage of any post-quarter weakness."
Deutsche Bank believes Dell may report quarterly results with margins and earnings inline, but light on the top line. For the quarter, the firm forecasts earnings will total $0.44 per share on $15.6 billion in sales. Analysts mainly believe investors will be interested and focused on future guidance and were management sees the company’s margins and revenues growth coming from in the near future. Deutsche is reaffirming its Buy rating going into earnings tonight.
Collins Stewart is maintaining its Neutral rating on shares of Dell ahead of earnings, while reducing its price target from $18 to $17. The firm believes shares will continue to remain range bound, $14-$16.50, over the near term, or at least until management can offer more visibility into sustainable margin levels.
Analysts note that gross margin sustainability has been their major concern for the company over a long period of time, but following the release of last quarter's results the concern moved to operating margin. The firm notes that after looking into the company’s supply chain and talking with CIO’s, the company’s new margin structure appears to be sustainable. Until this clarity is emerges in the form of results, Collins Stewart anticipates shares will continue to trade at rates below its peers.
The Wall Street consensus has Dell reporting earnings of $0.47 per share for the quarter on $15.65 billion in sales. For the fiscal year 2012, the consensus estimate is EPS of $2.01 and $62.56 billion in total sales. For the third quarter 2011, the company reported earnings of $0.45 per share on $15.39 billion in total sales.
Analysts rate shares of Dell with 20 Buy ratings, 13 Hold ratings, and 5 Sell ratings. The average price target on shares of DELL is $17.30, and range from $9.25 to $25.
Analysts at JPMorgan forecast Dell will meet or beat expectations for the quarter, but are maintaining their Underweight rating. The firm currently has a price target of $17.50 on the shares. For the quarter, JPMorgan estimates $0.48 per share in earnings on $15.81 billion in sales. For gross and operating margins, the firm forecasts 22.4 percent and 7.6 percent. They believe that the growth over the quarter will be driven by a higher-quality revenue mix and favorable component cost environment.
For the fourth quarter, the firm is expecting weak guidance due to macro uncertainties and notes that it may even be below its estimates of $0.47 per share in earnings and $16.52 billion in sales. Gross margin may fall over the quarter as a result of rising HDD prices.
An analyst at JPMorgan comments, "We still need to see more than just gross and operating margin improvements to become constructive on the stock. Specifically, we are looking for above-peer revenue and profit growth potential. In the interim, though, the stock could become attractive to opportunistic investors looking to take advantage of any post-quarter weakness."
Deutsche Bank believes Dell may report quarterly results with margins and earnings inline, but light on the top line. For the quarter, the firm forecasts earnings will total $0.44 per share on $15.6 billion in sales. Analysts mainly believe investors will be interested and focused on future guidance and were management sees the company’s margins and revenues growth coming from in the near future. Deutsche is reaffirming its Buy rating going into earnings tonight.
Collins Stewart is maintaining its Neutral rating on shares of Dell ahead of earnings, while reducing its price target from $18 to $17. The firm believes shares will continue to remain range bound, $14-$16.50, over the near term, or at least until management can offer more visibility into sustainable margin levels.
Analysts note that gross margin sustainability has been their major concern for the company over a long period of time, but following the release of last quarter's results the concern moved to operating margin. The firm notes that after looking into the company’s supply chain and talking with CIO’s, the company’s new margin structure appears to be sustainable. Until this clarity is emerges in the form of results, Collins Stewart anticipates shares will continue to trade at rates below its peers.
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