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Dell (DELL) Q4 Earnings Miss Estimates, Revenues Up Y/Y
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Dell Technologies (DELL - Free Report) reported fourth-quarter fiscal 2022 non-GAAP earnings of $1.72 per share, missing the Zacks Consensus Estimate by 11.79%. The bottom line declined 2% year over year. The VMWare business spinoff’s impact on the diluted shares increased to 810 million, consequently affecting earnings growth.
Revenues, on a non-GAAP basis, improved 16% year over year to $28 billion and beat the consensus mark by 2.04%.
Product revenues increased 17% year over year to $22.46 billion. Services revenues rose 11% year over year to $5.52 billion.
Dell’s shares have fallen 0.6% year to date, compared with the Zacks Computers – IT Services industry’s decline of 17%. Meanwhile, the Computer & Technology sector has tumbled 14.1%.
The global supply chain shortage of semiconductors and rising freight charges have affected the the company’s top line. In the quarter under review, the company experienced a backlog in the PC and Infrastructure Solutions business due to supply chain issues.
Dell Technologies Inc. Price, Consensus and EPS Surprise
Infrastructure Solutions Group (“ISG”) revenues were up 3% year over year to $9.2 billion.
The upside can be attributed to a 7% growth in servers and networking revenues that totaled $4.7 billion. Storage revenues were flat year over year at $4.5 billion.
Client Solutions Group (“CSG”) revenues were $17.3 billion, up 26% year over year. This performance was driven by Commercial revenues, which surged 30% year over year to $12.9 billion. Consumer revenues were up 16% to $4.4 billion.
Dell won 47 awards at CES in the fourth quarter. The company announced the launch of the new XPS 13 plus and the world’s first quantum dot OLED gaming notebook, Alienware 14.
Operating Details
Non-GAAP gross profit was flat year over year to $5.8 billion. Gross margin contracted 320 basis points (bps) year over year to 20.8%.
Adjusted EBITDA increased 3% year over year to $2.7 billion. Adjusted EBITDA margin contracted 130 bps year over year to 9.6%.
Non-GAAP operating income was $2.2 billion, up 1% from the year-ago quarter’s levels. Operating margin contracted 210 bps year over year to 13%.
Balance Sheet and Cash Flow
As of Jan 28, 2022, Dell had $11.3 billion in cash and investments.
Debt was $16.1 billion as of Jan 28, 2021. The company cleared $10.6 billion of debt year to date, primarily funded with $9.3 billion in VMware dividend proceeds.
Cash flow from operations was $3.1 billion in the reported quarter.
Guidance
Dell expects first-quarter revenues in the range of $24.5 billion to $25.7 billion, suggesting 11% growth at the mid-point.
For the fourth quarter, non-GAAP earnings is expected to be $1.25-$1.50 per share, suggesting 2% growth at the mid-point.
Zacks Rank & Stocks to Consider
Dell carries a Zacks Rank #3 (Hold).
Some better-ranked stocks to consider in the same sector are Blend Labs (BLND - Free Report) , Asana (ASAN - Free Report) and Allied Motion Technologies .
Image: Bigstock
Dell (DELL) Q4 Earnings Miss Estimates, Revenues Up Y/Y
Dell Technologies (DELL - Free Report) reported fourth-quarter fiscal 2022 non-GAAP earnings of $1.72 per share, missing the Zacks Consensus Estimate by 11.79%. The bottom line declined 2% year over year. The VMWare business spinoff’s impact on the diluted shares increased to 810 million, consequently affecting earnings growth.
Revenues, on a non-GAAP basis, improved 16% year over year to $28 billion and beat the consensus mark by 2.04%.
Product revenues increased 17% year over year to $22.46 billion. Services revenues rose 11% year over year to $5.52 billion.
Dell’s shares have fallen 0.6% year to date, compared with the Zacks Computers – IT Services industry’s decline of 17%. Meanwhile, the Computer & Technology sector has tumbled 14.1%.
The global supply chain shortage of semiconductors and rising freight charges have affected the the company’s top line. In the quarter under review, the company experienced a backlog in the PC and Infrastructure Solutions business due to supply chain issues.
Dell Technologies Inc. Price, Consensus and EPS Surprise
Dell Technologies Inc. price-consensus-eps-surprise-chart | Dell Technologies Inc. Quote
Quarter in Detail
Infrastructure Solutions Group (“ISG”) revenues were up 3% year over year to $9.2 billion.
The upside can be attributed to a 7% growth in servers and networking revenues that totaled $4.7 billion. Storage revenues were flat year over year at $4.5 billion.
Client Solutions Group (“CSG”) revenues were $17.3 billion, up 26% year over year. This performance was driven by Commercial revenues, which surged 30% year over year to $12.9 billion. Consumer revenues were up 16% to $4.4 billion.
Dell won 47 awards at CES in the fourth quarter. The company announced the launch of the new XPS 13 plus and the world’s first quantum dot OLED gaming notebook, Alienware 14.
Operating Details
Non-GAAP gross profit was flat year over year to $5.8 billion. Gross margin contracted 320 basis points (bps) year over year to 20.8%.
Adjusted EBITDA increased 3% year over year to $2.7 billion. Adjusted EBITDA margin contracted 130 bps year over year to 9.6%.
Non-GAAP operating income was $2.2 billion, up 1% from the year-ago quarter’s levels. Operating margin contracted 210 bps year over year to 13%.
Balance Sheet and Cash Flow
As of Jan 28, 2022, Dell had $11.3 billion in cash and investments.
Debt was $16.1 billion as of Jan 28, 2021. The company cleared $10.6 billion of debt year to date, primarily funded with $9.3 billion in VMware dividend proceeds.
Cash flow from operations was $3.1 billion in the reported quarter.
Guidance
Dell expects first-quarter revenues in the range of $24.5 billion to $25.7 billion, suggesting 11% growth at the mid-point.
For the fourth quarter, non-GAAP earnings is expected to be $1.25-$1.50 per share, suggesting 2% growth at the mid-point.
Zacks Rank & Stocks to Consider
Dell carries a Zacks Rank #3 (Hold).
Some better-ranked stocks to consider in the same sector are Blend Labs (BLND - Free Report) , Asana (ASAN - Free Report) and Allied Motion Technologies .
Blend Labs and Allied Motion Technologies sport a Zacks Rank #1 (Strong Buy), while Asana carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Blend Labs’ shares have tumbled 58.3% in the past year.
Blend Labs is scheduled to report fourth-quarter 2021 results on Mar 2.
Asana’s shares have returned 57% in the past year.
Asana is scheduled to report fourth-quarter 2022 results on Mar 9.
Allied Motion Technologies’ shares have returned 6.5% in the past year.
AMOT is scheduled to report fourth-quarter 2021 results on Mar 9.