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Debt, Ownership Questions Add Uncertainty for Dell

The no-moat firm has a sound strategy, but uncertainty is very high given debt levels and ownership concentration.


Mark Cash: We recently initiated coverage of Dell Technologies with a fair value estimate of $56 per share, and we view this no-moat, stable moat-trend name as slightly undervalued. However, we assigned a very high uncertainty rating to the company due to its substantial debt load and concentrated ownership profile.

Made up of eight brands, including an 81% ownership stake in narrow-moat VMware, Dell Technologies offers products that cover the entire IT infrastructure ecosystem. We expect a gradual slowdown in the PC market to force Dell Technologies to rely on growth elsewhere. In our view, the company is well-positioned to execute on rapidly growing trends like flash-based storage, hyperconverged infrastructure, and software-defined networking.

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