Dell Technologies breaks out ahead of earnings release

Key Points

• Dell just broke out of a lengthy consolidation period ahead of its upcoming earnings report on February 29.
• The company's stock has shown strong performance, up almost 15% year-to-date and a remarkable 109% over the previous year.
• Analyst sentiment on Dell is generally bullish, with recent upgrades from JPMorgan Chase & Co. and UBS Group, though the consensus price target suggests a potential 8% downside.

Ahead of its upcoming earnings report on February 29, Dell Technologies NYSE: DELL just broke out of a lengthy consolidation. Year-to-date, the technology and computer giant is now up almost 15% and a whopping 109% over the previous year.

The company has recently received several favorable analyst upgrades and has continued its uptrend ahead of its earnings report. With the stock in an uptrend and significantly outperforming its sector and the overall market, might it be a buy ahead of its upcoming earnings report?

Let's look closer at its previous earnings report, the current setup, and what you can expect in its upcoming earnings release to better gauge the sentiment.

Snapshot of Dell Technologies

Dell Technologies is a global computer technology corporation based in Round Rock, Texas. It specializes in creating, marketing, and supporting various products, including personal computers, servers, data storage devices, network switches, software, and other technological solutions. Its offerings cater to consumers, small businesses, and large enterprises across the globe.

The company's stock offers a dividend yield of 1.68% and has a price-to-earnings ratio (P/E) of 24.27, placing it slightly above the attractive value territory. However, its forward P/E of 12.73 is an appealing prospect for value investors. The stock, now valued at almost $65 billion, is trading at the high end of its 52-week range and has a daily average volume of nearly 4 million shares. 

Dell is set to report earnings on February 29

Dell previously released its quarterly earnings data on November 30, 2023. The company reported an EPS of $1.88 for the quarter, surpassing analysts' expectations of $1.46 by $0.42. Despite revenues of $22.25 billion during the quarter, slightly below analyst estimates of $23.01 billion, Dell experienced a 10.0% decrease in revenue compared to the same quarter last year. 

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Over the past year, Dell has achieved $3.62 earnings per share. Looking ahead, Dell anticipates a 6.36% growth in earnings, projecting an increase from $5.66 to $6.02 per share in the upcoming year.

The company confirmed that its next quarterly earnings report will be published on Thursday, February 29, 2024, with an accompanying earnings conference call scheduled for 4:30 p.m. Eastern on the same day.

Analysts are bullish but don't forecast upside potential

Dell has a moderate buy rating based on fifteen analyst ratings. Its rating is in line with other computer and technology companies in the S&P 500 and greater than the consensus S&P 500 rating that is currently held. 

While the rating is bullish, the consensus price target for Dell is not calling for additional upside. The $81.47 consensus price target forecasts a potential 8% downside for Dell shares. 

Most recently, however, several analysts have positively changed their commentary on Dell. On January 8, JPMorgan Chase & Co. upgraded the stock from neutral to overweight and boosted its price target from $77 to $90. Just days ago, on February 16, UBS Group boosted its target from $80 to $99, forecasting almost 17% upside at the report date. 

DELL breaks out ahead of earnings

As the stock approaches a significant catalyst, it's certainly setting the tone by breaking out of a lengthy consolidation. Since the beginning of January, the stock has consolidated in a tight range between $82 and $87 on relatively low volume.

On Thursday, the computer giant's shares broke above the consolidation's resistance and traded with unusually high volume. The price action, together with the volume, might signal that the breakout could experience momentum. Going forward, previous resistance at $87 will need to act as support ahead of its earnings and thereafter if the stock is to continue its charge higher.