Dell Technologies stock fell Friday despite the computer hardware giant beating expectations for its fiscal second quarter. Personal computer sales were strong but enterprise gear underperformed in the period. Dell stock sank more than 4% on the news.
The Round Rock, Texas-based company late Thursday said it earned an adjusted $2.24 a share on sales of $26.1 billion in the quarter ended July 30. Analysts had expected Dell earnings of $2.03 a share on sales of $25.6 billion, according to FactSet. On a year-over-year basis, Dell earnings rose 17% as sales climbed 15%.
“We had strong results again this quarter, with all business units growing,” Chief Financial Officer, Tom Sweet said in a written statement. “We are creating long-term value by taking share, pursuing high-value growth opportunities and profitably growing and modernizing our core business.”
For the current quarter, Dell expects revenue growth in the mid- to high teens year over year on a percentage basis. Its top-line forecast was ahead of forecasts, but its operating income guidance was below views.
On the stock market today, Dell stock dropped 4.5% to close at 96.95. During the regular session Thursday, Dell stock dipped 0.5% to 101.55.
On Tuesday, Dell stock broke out of a cup-with-handle base at a buy point of 100.93, according to IBD MarketSmith charts.
Dell’s PC sales rose 27% to $14.3 billion in the fiscal second quarter. The work-from-home and school-at-home trends spurred by the Covid-19 pandemic continue to fuel PC sales.
However, revenue in Dell’s Infrastructure Solutions Group rose just 3% to $8.4 billion. Growth in servers and networking equipment offset a 1% decline in storage gear sales.
Dell’s VMware (VMW) subsidiary posted sales of $3.1 billion, up 8%.
Meanwhile, industry peer, HP reported mixed quarterly results late Thursday. The Palo Alto, Calif.-based company earned an adjusted $1 a share on sales of $15.29 billion in its fiscal third quarter ended July 31. Analysts expected HP earnings of 84 cents a share on sales of $15.9 billion. On a year-over-year basis, HP earnings jumped 104% as sales rose 7%.
For the current quarter, the PC and printer maker forecast adjusted earnings of 87 cents a share, based on the midpoint of its outlook. It did not provide a sales target. Wall Street had expected HP earnings of 81 cents a share on sales of $15.99 billion in the fiscal fourth quarter.
HP stock dipped 0.5% to close at 28.95 on Friday. During the regular session Thursday, it slipped 1% to 29.10.
Dell stock ranks first out of 12 stocks in IBD’s Computer-Hardware and Peripherals industry group, according to IBD Stock Checkup. It has an IBD Composite Rating of 86 out of 99. HP stock ranks fourth in the group with a Composite Rating of 70.
IBD’s Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
