Dell Technologies (DELL:NYS) Fundamental Valuation Report

Fundamental Valuation Report

Dell Technologies(DELL:NYS)

Technology:Computer Hardware

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$67.37 (USD) 09/16/2020

Weighted Valuation
$70.70 (USD)

Overall Rating
Fairly valued to slightly Undervalued by 4.9%

Valuation Models Comparables: $70.70 (USD)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Fairly valued on a Comparable Valuation
Asset: Overvalued on an Asset Valuation
According to Analyst consensus at $56.60 this stock is Overvalued

Company Overview (DELL:NYS USD)

Price 67.37
Range 67.33 – 68.56
52 week 28.87 – 68.47
Open 67.67
Vol / Avg. 2.21M/2.51M
Mkt cap 49.57B
P/E 24.14
Div/yield 0.00/0.00
EPS 6.03
Shares 746.72M
Beta 0.00

Company 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, Boomi, 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 145,000 people and sells into 180 countries.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for DELL:NYS

Using a discounted cash flow model we generated an intrinsic value of $343.36 (USD) for DELL:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

DELL:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $343.36 1% 5% 1% 5%
WACC (or Ke) 4.43 $444.20 $279.67
Terminal Growth Rate 0.00 $285.43 $435.06
Tax Rate 0.27 $362.07 $324.66
Cash Flow 12,504,600,000 $329.71 $357.02
Capital Expenditures 6,800,000 $343.37 $343.36
Long Term Debt 0 $343.36 $343.36

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $70.70 (USD) for DELL:NYS. We also generated a valuation of $41.44 (USD) using other metrics and comparables.
The comparable companies were Western Digital (WDC:NAS), NetApp (NTAP:NAS), HP (HPQ:NYS) and Arista Networks (ANET:NYS).

Company DELL:NYS End Date Value
Earnings/Share $2.75 (USD)
Book Value/Share $0.26 (USD)
Sales/Share $121.20 (USD)
Cash Flow/Share $10.42 (USD)
EBITDA/Share $11.67 (USD)
Price Based on Comps Adjustment Factor (%)
$42.07 (USD) 0.0
$3.55 (USD) 0.0
$123.70 (USD) 0.0
$62.61 (USD) 0.0
$121.58 (USD) 0.0
DELL:NYS Ratios Used Average Values WDC:NAS NTAP:NAS HPQ:NYS ANET:NYS
24.50 PE Ratio 15.30 0.00 13.08 10.90 21.92
263.38 PB Ratio 13.88 1.23 35.26 0.00 5.15
0.56 PS Ratio 2.58 0.69 1.88 0.50 7.26
6.47 PCF Ratio 12.86 14.03 10.38 9.30 17.72
10.33 EV to EBITDA 10.41 9.45 7.77 7.38 17.06

Multiples

Using a multiples approach we generated a valuation of  $49.71 (USD) for DELL:NYS

Company DELL:NYS End Date Value
Earnings/Share $2.75 (USD)
Book Value/Share $0.26 (USD)
Sales/Share $121.20 (USD)
Cash Flow/Share $10.42 (USD)
EBITDA/Share $11.67 (USD)
Price Based on Comps Adjustment Factor
$26.95 (USD) 0
$1.21 (USD) 0
$50.10 (USD) 0
$54.13 (USD) 0
$116.16 (USD) 0
Ratios Ratio Average
PE Ratio 9.80
PB Ratio 4.73
PS Ratio 0.41
PCF Ratio 5.20
EV to EBITDA 9.95

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  DELL:NYS for the last 2 years was  4.73

We ran the Adjusted Book Value for  DELL:NYS and generated a book value of  $0.26 (USD)
By multiplying these we get an adjusted valuation of  $1.21 (USD)

Analyst Data

In the Stockcalc database there are 5 analysts that provide a valuation for DELL:NYS. The 5 analysts have a concensus valuation for DELL:NYS for 2021 of $56.60 (USD).

DELL:NYS Dell Technologies

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
0 6 0 3.0000 Hold 2020-9-15

Current Price: 67.37 USD

Analyst Consensus
USD Millions 2021 2022 2023
Mean EPS 6.27 6.77 7.41
# EPS Analysts 4 4 3
Mean Revenue 89,816.70 92,441.10 93,735.00
# Revenue Analysts 4 4 3
Mean Target Price 56.60
Mean Cash Flow 11.23 11.53 12.52
Mean EBITDA 10,715.30 11,233.10 12,504.60
Mean Net Income 3,771.70 4,137.60 4,367.30
Mean Debt Outstanding 34,777.90 29,426.70 23,192.50
Mean Tax Rate
Mean Growth Rate 5.11
Mean Capital Expenditure 1,905.80 1,907.40 1,744.90

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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