Market Sentiment Around Loss-Making Dell Technologies Inc. (NYSE:DELL)
Dell Technologies Inc.'s (NYSE:DELL): Dell Technologies Inc. designs, develops, manufactures, markets, sells, and supports information technology (IT) products and services worldwide. On 01 February 2019, the US$45b market-cap posted a loss of -US$2.3b for its most recent financial year. As path to profitability is the topic on DELL’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for DELL’s growth and when analysts expect the company to become profitable.
See our latest analysis for Dell Technologies
DELL is bordering on breakeven, according to the 9 Tech analysts. They expect the company to post a final loss in 2020, before turning a profit of US$306m in 2021. DELL is therefore projected to breakeven around 2 years from today. What rate will DELL have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 94%, which signals high confidence from analysts. If this rate turns out to be too aggressive, DELL may become profitable much later than analysts predict.
Underlying developments driving DELL’s growth isn’t the focus of this broad overview, but, keep in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing I would like to bring into light with DELL is it currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. Oftentimes, losses exist only on paper but other times, it can be a red flag.
Next Steps:
There are key fundamentals of DELL which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at DELL, take a look at DELL’s company page on Simply Wall St. I’ve also put together a list of relevant aspects you should further research:
Valuation: What is DELL worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether DELL is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Dell Technologies’s board and the CEO’s back ground.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
