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Dell Technologies Inc DELL

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Morningstar’s Analysis

Valuation
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Dell Posts Strong First Quarter and Capitalizes on Digitalization-Induced Demand; Raising FVE to $80

Mark Cash Senior Equity Analyst

Analyst Note

| Mark Cash |

We are raising our fair value estimate to $80 from $75 for no-moat Dell Technologies after its first quarter. Revenue and earnings per share beat our expectations by a decent margin as the company reported broad-based growth. Upside was driven chiefly by the client solutions group, or CSG, which saw significant growth in demand for computers from the commercial and consumer sectors, and a return to growth in the infrastructure solutions group, or ISG. We are encouraged by Dell’s broad-based expanding addressable markets, as the company continues to benefit from accelerated trends toward digitalization, remote working and learning environments, and cloud-based infrastructure. We believe the secular trends of organizations accelerating the adoption of digitalization, cloud-based infrastructure, and facilitating remote working and learning environments, are aligned with Dell’s core capabilities, and the company is executing well. With shares trading in the mid- to high $90 area, we continue to view shares as slightly overvalued.

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Company Profile

Business Description

Dell Technologies, born from Dell's 2016 acquisition of EMC, is a leading provider of servers and storage products through its ISG segment; PCs, monitors, and peripherals via its CSG division; and virtualization software through VMware. Its brands include Dell, Dell EMC, VMware (expected to be spun off toward the end of 2021), Boomi (expected to be sold by the end of 2021), Secureworks, and Virtustream. The company focuses on supplementing its traditional mainstream servers and PCs with hardware and software products for hybrid-cloud environments. The Texas-based company employs around 158,000 people and sells globally.

Contact
One Dell Way
Round Rock, TX, 78682
T +1 800 289-3355
Sector Technology
Industry Computer Hardware
Most Recent Earnings Apr 30, 2021
Fiscal Year End Jan 29, 2022
Stock Type Cyclical
Employees 158,000

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