Time To Buy DELL Stock?

The Trump administration recently announced tariff exemptions for several high-tech imports, such as smartphones, laptops, semiconductor gear, and other electronics. This development is likely to be beneficial for companies like Dell Technologies (NYSE:DELL). Despite a significant 30% drop this year due to tariff and trade war tensions, we believe DELL stock, currently around $87, presents a compelling buying opportunity despite inherent risks. While our analysis of its valuation compared to its recent operating performance and financial health reveals underlying weaknesses across key metrics like Growth, Profitability, Stability, and Downturn Resilience (detailed below), the current low valuation makes it attractive. However, for investors who seek lower volatility than individual stocks, the Trefis High-Quality portfolio presents an alternative – having outperformed the S&P 500 and generated returns exceeding 91% since its inception.

Image by Joshua Woroniecki from Pixabay

How Does Dell Technologies’ Valuation Look vs. The S&P 500?

Going by what you pay per dollar of sales or profit, DELL stock looks very cheap compared to the broader market.

• Dell Technologies has a price-to-sales (P/S) ratio of 0.6 vs. a figure of 2.8 for the S&P 500
• Additionally, the company’s price-to-operating income (P/EBIT) ratio is 8.9 compared to 21.3 for S&P 500
• And, it has a price-to-earnings (P/E) ratio of 12.1 vs. the benchmark’s 21.3

How Have Dell Technologies’ Revenues Grown Over Recent Years?

Dell Technologies’ Revenues have seen some growth over recent years.

• Dell Technologies has seen its top line shrink at an average rate of 1.5% over the last 3 years (vs. increase of 6.2% for S&P 500)
• Its revenues have grown 8.1% from $88 Bil to $96 Bil in the last 12 months (vs. growth of 5.3% for S&P 500)
• Also, its quarterly revenues grew 7.2% to $24 Bil in the most recent quarter from $22 Bil a year ago (vs. 4.9% improvement for S&P 500)

How Profitable Is Dell Technologies?

Dell Technologies’ profit margins are much worse than most companies in the Trefis coverage universe.

• Dell Technologies’ Operating Income over the last four quarters was $6.2 Bil, which represents a poor Operating Margin of 6.5% (vs. 13.1% for S&P 500)
• Dell Technologies’ Operating Cash Flow (OCF) over this period was $4.5 Bil, pointing to a poor OCF-to-Sales Ratio of 4.7% (vs. 15.7% for S&P 500)

Does Dell Technologies Look Financially Stable?

Dell Technologies’ balance sheet looks weak.

• Dell Technologies’ Debt figure was $25 Bil at the end of the most recent quarter, while its market capitalization is $58 Bil (as of 4/11/2025). This implies a poor Debt-to-Equity Ratio of 44.3% (vs. 21.5% for S&P 500). [Note: A lower Debt-to-Equity Ratio is desirable]
• Cash (including cash equivalents) makes up $3.6 Bil of the $80 Bil in Total Assets for Dell Technologies.  This yields a poor Cash-to-Assets Ratio of 4.6% (vs. 15.0% for S&P 500)

How Resilient Is DELL Stock During A Downturn?

DELL stock has seen an impact that was slightly better than the benchmark S&P 500 index during some of the recent downturns. While investors have their fingers crossed for a soft landing by the U.S. economy, how bad can things get if there is another recession? Our dashboard How Low Can Stocks Go During A Market Crash captures how key stocks fared during and after the last six market crashes.

Inflation Shock (2022)

• DELL stock fell 44.4% from a high of $60.77 on 9 February 2022 to $33.77 on 12 October 2022, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 1 September 2023
• Since then, the stock has increased to a high of $179.21 on 29 May 2024 and currently trades at around $87

Covid Pandemic (2020)

• DELL stock fell 45.9% from a high of $26.87 on 19 February 2020 to $14.54 on 18 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 29 June 2020

Putting All The Pieces Together: What It Means For DELL Stock

In summary, Dell Technologies’ performance across the parameters detailed above are as follows:

• Growth: Strong
• Profitability: Very Weak
• Financial Stability: Very Weak
• Downturn Resilience: Neutral
• Overall: Neutral

While our analysis suggests DELL stock carries risk due to its moderate performance across key parameters, we believe its extremely low valuation makes it an attractive buy. Furthermore, we anticipate tailwinds from the recently announced tariff exemptions on products like laptops and electronics, coupled with the company’s announcement last month of an additional $10 billion in share repurchases and a dividend increase, which should support its stock price growth.

While DELL stock looks promising, investing in a single stock can be risky. On the other hand, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics.