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Stock Analyst Update

Dell's Growing Pains Far from the End of the World

PC maker still has opportunities despite slowing growth.

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As many feared, Dell's (DELL) revenue growth was a bit weaker than Wall Street expectations in its July-ending quarter, even though the company beat consensus earnings estimates by a penny Thursday. Yet it still appears that the firm has the ability to continue outperforming many of its peers in the computer-hardware industry in both growth and returns on capital. Thus, if its shares continue to decline, it may be a good time for investors to take a closer look at Dell.

On the whole, Dell's fiscal second-quarter results were solid, but not exceptional. Revenue growth clocked in at 25% compared with the prior-year period, which is high compared with the rate at which the PC industry is growing, but slower than management's 30% growth goal set in the beginning of the year. But including first-quarter results, Dell is actually fairly close to being on track for 30% growth this year.

Jeremy Lopez does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.