NYSE: DELL

DELL TECHNOLOGIES INC Report created Dec 4, 2023 Page 1 OF 7

After trading as a public company for 25 years, Dell Inc. went private in October 2013; acquired EMC Corp. Argus Recommendations
in fall 2016; and resumed trading as a public company under the DELL ticker in December 2018. Dell
operates two businesses: Infrastructure Solutions Group (ISG), which provides enterprise server, storage,
and network solutions; and Client Solutions Group (CSG), which provides PCs and peripherals. In November Twelve Month Rating SELL HOLD BUY
2021, Dell spun off VMware.
Five Year Rating SELL HOLD BUY
Analyst's Notes Under Market Over
Sector Rating Weight Weight Weight
Analysis by Jim Kelleher, CFA, December 4, 2023
ARGUS RATING: BUY Argus assigns a 12-month BUY, HOLD, or SELL rating to each
stock under coverage.
• Margin expansion amid cautious outlook; BUY to $90 • BUY-rated stocks are expected to outperform the market (the
benchmark S&P 500 Index) on a risk-adjusted basis over the
• Dell Technologies posted fiscal 3Q24 revenue that missed consensus expectations, but non-GAAP next year.
EPS well ahead of Street estimates on mix and operating efficiency. • HOLD-rated stocks are expected to perform in line with the
• Fiscal 3Q24 revenue declined 10% year-over-year, and non-GAAP EPS fell 18% year-over-year while market.
rising sequentially. A higher mix of premium consumer and enterprise PCs, improved supply • SELL-rated stocks are expected to underperform the market
on a risk-adjusted basis.
availability, and cost controls helped offset reduced volume leverage.
The distribution of ratings across Argus' entire company
• Dell's Infrastructure Solutions revenue fell 12% year-over-year, while Client Solutions was down universe is: 71% Buy, 28% Hold, 0% Sell.
11%.
• We believe Dell is closer to the end than to the beginning of the PC down-cycle, and favorable mix Key Statistics
should drive margin recovery. We are reiterating our BUY rating and our 12-month target price of $90. Key Statistics pricing data reflects previous trading day's closing
price. Other applicable data are trailing 12-months unless
INVESTMENT THESIS otherwise specified

BUY-rated Dell Technologies Inc. (NYSE: DELL) fell 5% in a rising market on 12/1/23 Market Overview
after the company posted a mixed quarterly performance. Fiscal 3Q24 revenue of $22.3 Price $71.93
billion lagged consensus expectations by $600 million. Non-GAAP EPS of $1.88, however, Target Price $90.00
was more than $0.40 ahead of Street estimates on mix and operating efficiency. Dell's 52 Week Price Range $35.96 to $76.09
mixed fiscal 3Q24 performance follows a fiscal 2Q24 quarter in which revenue topped the Shares Outstanding 254.31 Million
consensus call by over $2 billion, suggesting that some revenue had been pulled forward Dividend $1.48
into the prior quarter. Sector Overview
Although Intel and PC-tracking entities such as IDC and Canalys predict positive Sector Technology
annual trends in calendar 4Q23 PC sales, Dell provided cautious guidance for its fiscal Sector Rating OVER WEIGHT
4Q24, which ends in January 2024. The company guided for 4Q24 midpoint revenue of Total % of S&P 500 Market Cap. 29.00%
$22.0 billion, which would be down 12% annually, and non-GAAP EPS of $1.70, which Financial Strength
would be down 6%. Financial Strength Rating MEDIUM
The company is positive regarding the AI device opportunity both in the server space Debt/Capital Ratio 111.0%
and in the PC space. Management indicated that orders for AI servers more than doubled Return on Equity --
quarter over quarter, and the AI server backlog exceeded $1.6 billion exiting the quarter. Net Margin 2.9%
Payout Ratio 0.22
Market Data Pricing reflects previous trading week's closing price. Current Ratio 0.82
200-Day Moving Average Target Price: $90.00 52 Week High: $76.09 52 Week Low: $68.50 Closed at $71.93 on 12/1 Revenue $91.15 Billion
Price After-Tax Income $2.67 Billion
($)
Valuation
75 Current FY P/E 10.78
Prior FY P/E 9.45
Price/Sales 0.20
50
Price/Book -19.55
Book Value/Share -$3.68
Market Capitalization $18.29 Billion
Rating BUY
HOLD
SELL Forecasted Growth
EPS 1 Year EPS Growth Forecast
($) -12.35%
5 Year EPS Growth Forecast
8.00%
Quarterly 1.35 1.48 1.66 1.72 1.84 1.68 2.30 1.80 1.31 1.74 1.88 1.75 1.62 1.90 1.79 1.88
6.21 7.61 6.67 ( Estimate) 7.19 ( Estimate)
1 Year Dividend Growth Forecast
Annual
12.12%
Revenue
($ in Bil.) Risk
Beta 1.17
Quarterly 22.6 24.2 26.4 28.0 26.1 26.4 24.7 25.0 20.9 22.9 22.3 22.9 19.8 23.3 23.1 24.2 Institutional Ownership 74.52%
Annual 101.2 102.3 89.0 ( Estimate) 90.5 ( Estimate)
FY ends Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Jan 31 2022 2023 2024 2025

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©2023 Argus Research Company Argus Analyst Report

 NYSE: DELL

DELL TECHNOLOGIES INC Report created Dec 4, 2023 Page 2 OF 7

Analyst's Notes ...Continued

The pipeline for AI-optimized servers tripled sequentially, with
rising interest from both hyperscale and enterprise customers. With
Intel ramping Meteor Lake and other AI-enabled CPUs, the
opportunity in AI PCs could drive the next big upgrade cycle, after
two down years for the PC industry.
Following the November 2021 spinoff of its 81% ownership
stake in VMware, Dell used the one-time dividend proceeds of $9.3
billion to pay down debt and raised its quarterly dividend by 12%.
Although Dell always guides conservatively, the company will most
likely have a down year in FY24. The company in our view should
be well-positioned for growth and margin expansion as markets
normalize over the coming year. For the longer term, and
particularly as the AI server and PC market gain momentum, we
believe Dell is poised for outperformance and continued share gains
in a challenging environment.
DELL remains inexpensive by historical standards and relative
to peers. We are reiterating our near- and long-term BUY ratings
and our spinoff-adjusted target price of $90.
RECENT DEVELOPMENTS
DELL shares are up 79% year-to-date in 2023, versus a 33%
gain for the peer group. DELL shares declined 28% in 2022, versus
a 30% decline for the peer group of Argus-covered information
processing, computing, and data storage companies. Adjusted for
the stock-price reset following the VMware spinoff, DELL shares
advanced 51% in 2021, versus a 35% gain for peers. DELL rallied
58% in 2020, compared to a 9% gain for the peer group. After
returning as a public company, Dell rose 19% in 2019 compared to
a 39% gain for peers.
For fiscal 3Q24 (ended 11/3/23), revenue of $22.25 billion was
down 10% year-over-year and 3% on a sequential basis from
2Q24. Management resumed providing top- and bottom-line
guidance as of fiscal 4Q23. Revenue was below the low end of
management's guidance range of $22.5-$23.5 billion and missed
the $22.85 billion consensus estimate. Non-GAAP diluted EPS of
$1.88 was down 18% from the prior year and up $0.14
sequentially from 2Q24. Non-GAAP EPS far exceeded the high end
of management's $1.35-$1.55 guidance range and easily beat the
$1.46 consensus forecast.
COO Jeff Clarke noted that in fiscal 3Q23, the infrastructure
business and the client solutions business diverged somewhat. In
Infrastructure Solutions Group (ISG), demand for traditional
servers improved over the course of the quarter, while demand for
AI-enabled servers continues to accelerate across a wider range of
customers. Networking grew, while demand for storage was down
as expected. The net impact was that Infrastructure Solutions
Group revenue was sequentially flat.
In Client Solutions Group (CSG), which includes PCs, printing,
and peripherals, demand momentum seen in June and July
continued into August, but 'slowed as the quarter progressed,'
according to COO Clark. As a result, CSG revenue fell sequentially
and missed management's expectations. CSG executed well in a

Growth & Valuation Analysis Financial & Risk Analysis

GROWTH ANALYSIS
($ in Millions, except per share data) 2019 2020 2021 2022 2023 FINANCIAL STRENGTH 2021 2022 2023
Revenue 90,621 84,815 86,670 101,197 102,301 Cash ($ in Millions) 9,508 9,477 8,607
COGS 65,568 64,176 66,530 79,306 79,615 Working Capital ($ in Millions) -10,565 -11,186 -9,303
Gross Profit 25,053 20,639 20,140 21,891 22,686 Current Ratio 0.80 0.80 0.82
SG&A 20,640 15,819 14,000 14,655 14,136 LT Debt/Equity Ratio (%) 1,113.7 — —
R&D 4,604 2,454 2,455 2,577 2,779 Total Debt/Equity Ratio (%) 1,329.1 — —
Operating Income -191 2,366 3,685 4,659 5,771
Interest Expense 2,306 2,235 2,005 1,500 1,122 RATIOS (%)
Pretax Income -2,361 -51 2,346 5,923 3,225 Gross Profit Margin 23.2 21.6 22.2
Income Taxes -180 -572 101 981 803 Operating Margin 4.3 4.6 5.6
Tax Rate (%) — — 4 17 25 Net Margin 3.7 5.5 2.4
Net Income -2,310 4,616 3,250 5,563 2,442 Return On Assets 2.7 5.1 2.7
Diluted Shares Outstanding 719 751 767 791 753 Return On Equity 324.0 878.8 —
EPS -6.04 6.03 4.22 7.02 3.24 RISK ANALYSIS
Dividend — — — — 1.32 Cash Cycle (days) -47.0 -48.1 -35.1
GROWTH RATES (%) Cash Flow/Cap Ex 5.5 3.7 1.2
Revenue 14.7 -6.4 2.2 16.8 1.1 Oper. Income/Int. Exp. (ratio) 2.1 4.8 3.6
Operating Income — — 55.7 26.4 23.9 Payout Ratio 42.5
Net Income — — -29.6 71.2 -56.1
EPS — — 318.6 113.7 -48.2 The data contained on this page of this report has been
Dividend — — — — — provided by Morningstar, Inc. (© 2023 Morningstar, Inc.
Sustainable Growth Rate 88.7 900.4 131.0 38.4 38.4 All Rights Reserved). This data (1) is proprietary to
VALUATION ANALYSIS Morningstar and/or its content providers; (2) may not be
Price: High $70.55 $75.39 $115.00 $61.54 — copied or distributed; and (3) is not warranted to be
accurate, complete or timely. Neither Morningstar nor its
Price: Low $42.02 $25.51 $53.01 $32.90 —
content providers are responsible for any damages or
Price/Sales: High-Low 0.6 - 0.3 0.7 - 0.2 1.0 - 0.5 0.5 - 0.3 —-—
losses arising from any use of this information. Past
P/E: High-Low —-— 12.5 - 4.2 27.3 - 12.6 8.8 - 4.7 —-— performance is no guarantee of future results. This data
Price/Cash Flow: High-Low 6.3 - 3.8 6.4 - 2.1 6.9 - 3.2 12.0 - 6.4 —-— is set forth herein for historical reference only and is not
necessarily used in Argus’ analysis of the stock set forth
on this page of this report or any other stock or other
security. All earnings figures are in GAAP.

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 NYSE: DELL

DELL TECHNOLOGIES INC Report created Dec 4, 2023 Page 3 OF 7

Analyst's Notes ...Continued

tough environment, the COO noted, remaining disciplined on
pricing in a discounting environment.
AI 'continues to dominate technology business conversations,'
the COO stated, and customers are 'turning their operations upside
down' to see how they can use generative AI to advance their
operations in a meaningful way. We expect this early AI demand
environment to be turbulent, with traditional technologies such as
industry-standard servers and storage to be caught in the crossfire
as hyperscalers and large enterprises tear up past IT spending plans
and set new priorities. We also note that in fiscal 4Q24, Dell's
server and storage business meaningfully outperformed similar
operations at rival Hewlett Packard Enterprise.
During fiscal 3Q24, Dell ISG shipped over $500 million of
AI-optimized servers, while increasing to about one-third of total
server revenue in 3Q24. Demand for AI servers more than doubled
quarter over quarter, while far exceeding supply. The AI server
backlog exceeded $1.6 billion exiting the quarter. The pipeline for
AI-optimized servers tripled sequentially, with rising interest from
both hyperscale and enterprise customers.
Given that 'AI hype is everywhere,' the company is being
'measured' in its expectations in the very early innings of the AI
age. Experience across multiple technology cycles suggests that
progress will not be linear, COO Clark cautioned. At the same
time, Dell believes that its broad solutions portfolio is uniquely
positioned to help customers build generative AI solutions to meet
their performance, cost and security requirements.
For fiscal 2Q23, Dell's product revenue of $16.2 billion (73%
of revenue) remained under pressure and declined 14%
year-over-year. Services & Software revenue of $6.0 billion (27%
of revenue) grew 4% annually, as software-defined storage
continues to drive that business.
During 3Q23, Infrastructure Solutions Group (ISG) revenue of
$8.0 billion (38% of total) was down 12% year-over-year and up
less than 1% sequentially. ISG operating income of $1.07 billion
was down 22% on an annual basis, as reduced volume leverage
offset favorable mix and ASPs. The ISG margin of 12.6% for 3Q24
improved from 12.4% for 2Q24 and was down from fiscal 14.3%
in fiscal 3Q23.
Within ISG, Server & Networking (S&N) revenue (21% of
company total) was down 14% annually and was flat sequentially.
The shift toward hybrid cloud solutions and AI infrastructure
investments by hyperscale customers acted to balance ongoing
softness in large enterprise demand.
In ISG, Dell saw an increase in demand for AI-optimized server
solutions. Fueled by legacy markets and more recently by AI, Dell
believes it has gained nine points of global standard (x86) server
share in 10 years, and five points in five years. The Power Edge
XE9680 is the fastest ramping sever solution in Dell history. Dell
has approximately $2 billion in XE9680 orders in backlog, and the
sales funnel is substantially higher.
Storage revenue (17% of company total) was down 13%
annually and 8% sequentially. Storage continues to see strength in

Peer & Industry Analysis

The graphics in this section are designed to
allow investors to compare DELL versus its Growth P/E
industry peers, the broader sector, and the DELL vs.
market as a whole, as defined by the Argus Market
Universe of Coverage. 11.5 DELL vs.
Sector
• The scatterplot shows how DELL stacks
More Value More Growth
up versus its peers on two key
characteristics: long-term growth and Price/Sales
value. In general, companies in the lower 11
left-hand corner are more value-oriented, DELL vs.
Market
while those in the upper right-hand corner DELL
are more growth-oriented. DELL vs.
Sector
• The table builds on the scatterplot by 10.5 More Value More Growth
displaying more financial information.
Price/Book
• The bar charts on the right take the
analysis two steps further, by broadening DELL vs.
the comparison groups into the sector level Market
10
and the market as a whole. This tool is DELL vs.
designed to help investors understand how Sector
DELL might fit into or modify a diversified More Value More Growth

Value
P/E

portfolio. 7.5 8 8.5 PEG

5-yr Growth Rate(%) DELL vs.
Market
5-yr Net 1-yr EPS DELL vs.
Market Cap Growth Current Margin Growth Argus Sector
More Value More Growth
Ticker Company ($ in Millions) Rate (%) FY P/E (%) (%) Rating
DELL Dell Technologies Inc 18,293 8.0 10.8 2.9 7.8 BUY 5 Year Growth
Peer Average 18,293 8.0 10.8 2.9 7.8 DELL vs.
Market
DELL vs.
Sector
More Value More Growth

Debt/Capital
DELL vs.
Market
DELL vs.
Sector
More Value More Growth

Please see important information about this report on page 7

©2023 Argus Research Company Argus Analyst Report


Analyst's Notes ...Continued
hyper-converged infrastructure, data protection, and PowerStore.
At the time of the EMC acquisition in 2016, EMC had disparate
and unintegrated product lines that in some cases competed with
each other. The former EMC storage business has now been
aligned around the Power line-up, and that is helping current
momentum despite economic pressures. Dell is the storage industry
leader, with market share at EMC larger than the No. 2, No. 3,
and No. 4 players combined.
Dell experienced continued demand growth in PowerStore, the
company's premium mid-range offering, and in PowerFlex, Dell's
software-defined storage solution. PowerStore has grown for 13
consecutive quarters since its release. PowerFlex, Dell's proprietary
software-defined storage solution, has posted nine consecutive
quarters of growth.
Also for fiscal 3Q24, Client Solutions Group (CSG) revenue of
$12.28 billion (55% of total) was down 11% annually and 5%
sequentially. CSG operating profit of $925 million for 3Q24 was
down 13% year-over-year. The CSG operating margin of 7.5% for
3Q24 was sequentially stable with 2Q24 and was down 20 basis
points from 7.7% in the prior year.
Dell's fiscal quarters do not fully align with the calendar
quarter, but PC performance by calendar quarter is still a
meaningful measuring stick for the company. In calendar 3Q23,
total global PC unit sales declined 8% year-over-year to 68.2
million units, according to IDC. Dell's unit sales declined 14% in
the quarter, and its global PC market share fell to 15.0% in
calendar 3Q23 (No. 3 market shares among all PC vendors) from
16.2% a year earlier.
Dell in our view is deliberately ceding unit PC shares as it moves
its mix to premium tiers in both the commercial and consumer
markets. The decline in unit share is consistent with Dell's shift
away from most consumer niches (excluding gaming and
premium-tier) and toward the mid- to upper-end of the commercial
market. Dell does not emphasize the Chromebook market and has
negligible share in tablets. We calculate that Dell's PC ASP for
fiscal 3Q24 was $1,192, up 4% year-over-year, and that Dell's PC
ASPs are significantly above those of HP Inc. That company
participates in the Chromebook market and has higher exposure in
a broader range of consumer and business tiers.
During 3Q24 within CSG, Commercial PC revenue (44% of
company total) declined 8% annually. Dell estimates it has gained
10 percentage points of commercial PC market share over the past
10 years. Consumer PC revenue (11% of company total) was down
19% year-over-year. Revenue from Consumer PCs was up 2%
sequentially in 3Q24, while commercial was down 7% quarter
over quarter.
When the pandemic compelled work-from-home and hybrid
work models, the PC resumed its role as the centerpiece of personal
technology. Global PC demand rose to 355 million units shipped in
2020, and unit shipments were little changed at about 350 million
in 2021. PC unit sales fell to the 250 million range in 2022 and
could about match that level in 2023, depending on 4Q23
performance. Argus believes that global PC demand on a unit basis
is starting to stabilize approximately near pre-pandemic levels. We
expect Dell's business to continue its pivot away from past reliance
on mid-tier consumer machines toward premium consumer and
enterprise notebook and desktop PCs.
Looking out to fiscal 4Q24, COO Clark noted that the recovery
ramp in PCs anticipated for fiscal 3Q24 has been 'pushed out' as
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©2023 Argus Research Company
NYSE: DELL
DELL TECHNOLOGIES INC Report created Dec 4, 2023 Page 4 OF 7
enterprise customers remain cautious in their spending. The PC
base continues to age, with very little growth in the 2022-23
period. Exciting advances are coming in calendar 2024 with
AI-enabled architectures coming from Intel and AMD in the
processor space and new Windows and ARM operating system
solutions. The company is also seeing signs of a traditional server
rebound, with storage expected to follow a couple of quarters later.
In past cycles, server demand has tracked the overall trend in PCs
on a lagged basis.
Dell has developed top 3 positions, including numerous No. 1
positions, in numerous tech hardware niches that represent large,
stable and expanding markets with strong underlying
fundamentals. In commercial PCs, storage, servers, and other
markets, Dell expects to remain a structural share-gainer over the
long term.
Given what it regards as key competitive strengths, Dell remains
confident in its long-term strategy. That includes generating
3%-4% annual revenue growth, which along with margin
expansion will drive 6%-plus growth in EPS. The company believes
its can sustain a 100%-plus net income-to-adjusted free cash flow
conversion rate, while returning 40%-60% of adjusted free cash
flow to shareholders.
Although Dell always guides conservatively, the company will
likely have a down FY24 year. We believe Dell is poised for
outperformance and continued share gains in a challenging
environment, and should be well-positioned for growth and margin
expansion as demand and markets normalize over the coming year,
and in particular as generative AI drive the server, storage,
networking and PC markets in calendar 2024.
EARNINGS & GROWTH ANALYSIS
For fiscal 3Q24 (ended 11/3/23), revenue of $22.25 billion was
down 10% year-over-year and 3% on a sequential basis from
2Q24. Management resumed providing top- and bottom-line
guidance as of fiscal 4Q23. Revenue was below the low end of
management's guidance range of $22.5-$23.5 billion and missed
the $22.85 billion consensus estimate.
The non-GAAP gross margin was 23.7% in fiscal 3Q24, vs.
24.1% in fiscal 2Q24 and 23.7% a year earlier. The non-GAAP
operating margin was 8.8% in 3Q24, compared to 8.6% in 2Q24
and 9.6% a year earlier.
Non-GAAP diluted EPS of $1.88 was down 18% from the prior
year and up $0.14 sequentially from 2Q24. Non-GAAP EPS far
exceeded the high end of management's $1.35-$1.55 guidance
range and easily beat the $1.46 consensus forecast.
For all of FY23, revenue of $102.3 billion was up 1% from
$101.2 billion in FY22, with all figures adjusted to exclude
VMware. Non-GAAP diluted EPS rose to $7.62, up 23% from
$6.22 in FY22.
For fiscal 4Q24, Dell is guiding for revenue of $21.5-$22.5
billion, which at the $22 billion midpoint be down 12% annually.
Management also guided for non-GAAP EPS of $1.60-$1.80 for
fiscal 4Q24, which at the $1.70 midpoint would be down 6%
annually.
Fiscal 4Q24 guidance at midpoint suggests FY24 revenue will
decline 13%-14% and non-GAAP EPS will be down in low
double-digit percentages for the year. The company increased its
FY24 non-GAAP EPS guidance to a range of $6.53-$6.73.
CFO Yvonne McGill shared Dell's early thinking about FY25.
Dell is seeing signs of stabilization and inflection in parts of the
Argus Analyst Report

Analyst's Notes ...Continued
portfolio, including traditional and AI-optimized servers. The
company expects a return to revenue growth in FY25, and will
remain mindful of pricing and cost discipline as it moves forward.
We are raising our FY24 non-GAAP forecast to $6.67 per
diluted share from $6.48. We are lowering our non-GAAP EPS
forecast for FY25 to $7.19 per diluted share from $7.22. We
regard our estimates as subject to change based on the evolving
business model and potential changes in the market outlook. Our
five-year annualized non-GAAP EPS growth rate forecast for Dell is
8%.
FINANCIAL STRENGTH & DIVIDEND
Our financial strength rating on Dell Technologies is Medium.
After working relentlessly to reduce debt in recent years, Dell added
debt in FY23 to increase its strategic flexibility. We will monitor
Dell's long-term progress in reducing its core debt load, generating
free cash flow, and reducing core leverage before considering a
possible upgrade to Medium-High.
Dell had cash and investments of $9.59 billion at the end of
fiscal 3Q24. Cash was $10.13 billion at the end of fiscal 2023,
$11.3 billion at the end of FY22, $15.83 billion at the end of
FY21, $10.2 billion at the end of FY20, and $10.7 billion at the
end of FY19.
Total debt was $26.6 billion at the end of fiscal 3Q24. Total
debt was $29.6 billion at the end of fiscal 2023, $26.9 billion at
the end of FY22, $48.0 billion at the end of FY21, $52.1 billion at
the end of FY20, and $53.5 billion at the end of FY19. Dell's debt,
which generally carried credit ratings of BB, has now been elevated
to investment grade.
Core debt, which excludes DFS and subsidiary debt, was $15.8
billion at the end of fiscal 3Q24. Core debt was $18.1 billion at the
end of fiscal 2023, $16.5 billion at the end of FY22, $33.4 billion
at year-end FY21, $37.8 billion at year-end FY20, and $42.7
billion at year-end FY19. Core debt was $48.8 billion at the time
of the EMC closing, meaning that Dell paid down over $33 billion
in core debt over the ensuing six-plus years.
Dell has paid down over $2 billion in debt in FY24 and paid
down about $2.0 billion in core debt in FY23, about $16 billion in
FY22, and about $5.5 billion in FY21. Most of the one-time
dividend from the VMware spin-off was dedicated to debt payoff.
Core operating leverage, measured as core debt divided by core
EBITDA, is now 1.6-times, putting it below the interim target of
3.0-times and on track to reach the long-term target for core
operating leverage of 1.5-times.
Cash flow from operations was $3.57 billion in FY23. Cash
flow from operations was $10.3 billion in FY22, $11.4 billion in
FY21, $9.3 billion in FY20 (which includes a $6.4 billion deferred
tax charge), and $7.0 billion in FY19.
In September 2021, Dell announced an expanded shareholder
return program, which included a $5 billion share repurchase
authorization effective as of November 2021. Over the 12 months
through 1Q24, Dell spent $1.6 billion to repurchase shares.
Dell in September 2021 announced a quarterly dividend of
$0.33 per share, paid for the first time in fiscal 1Q23. Dell intends
to pay an annual dividend equivalent to about $1 billion and to
grow the dividend about 6% annually, in line with targeted
long-term EPS growth.
In March 2023, Dell announced a 12% hike in its annual
dividend, to $1.48 from $1.32. Our dividend estimates are $1.48
for FY24 and $1.64 for FY25.
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NYSE: DELL
DELL TECHNOLOGIES INC Report created Dec 4, 2023 Page 5 OF 7
MANAGEMENT & RISKS
Michael S. Dell, who became a legend by starting a
multi-billion-dollar company out of his dorm room at the
University of Texas, remains chairman and CEO. Jeffrey W. Clarke
is vice chairman and COO. William F. Scannell is president of
Global Sales. Former Co-COO Charles Whitten resigned in July
2023.
Yvonne McGill became CFO in spring 2023. The COO and
CFO transitions of the past year have had no impact on stock
performance, which has been markedly stronger than that of the
peer group in 2023.
We believe the spinoff of VMware made strategic sense. It was
also financially smart, in that it should reduce Dell's debt while
potentially unlocking sum-of-the-parts valuations for both
companies.
Dell faces risks from operating as a do-it-all IT company, a
model that has grown unpopular on Wall Street and in the
technology world. Companies such as Hewlett-Packard have
chosen to split in two, while IBM has divested all non-enterprise,
low-margin commodity businesses. The disposition of VMware
should reduce organizational complexity.
Dell has so far sidestepped any pressures to split its PC business
from its infrastructure solutions business. In the current
environment, in which low-margin CSG is doing better than
higher-margin ISG, Dell likely gets a pass from investors.
Dell has scaled its business for a pandemic world dependent on
digital acceleration and remote-enabling technology. The company
faces risks if vaccines allow a return to more normal work patterns,
potentially leading to excess capacity and making Dell overstaffed
for its available markets. However, we believe that even with a
successful vaccine rollout, there will be no going back to the
pre-COVID-19 world, and that digital enablement will be a
persistent feature for businesses and consumers going forward.
COMPANY DESCRIPTION
After trading as a public company for 25 years, Dell Inc. went
private in October 2013; acquired EMC Corp. in fall 2016; and
resumed trading as a public company under the DELL ticker in
December 2018. Dell operates two businesses: Infrastructure
Solutions Group (ISG), which provides enterprise server, storage,
and network solutions; and Client Solutions Group (CSG), which
provides PCs and peripherals. In November 2021, Dell spun off
VMware.
VALUATION
Dell's historical valuation is complicated by the fact that DELL
shares resumed trading at the end of 2018 after the company went
private in 2013. We note that Dell remained a profitable business
through its private period. Additionally, distribution of the special
dividend of VMW shares reduced the DELL share price in half.
DELL trades at 10.8-times our FY24 non-GAAP EPS estimate
and at 10.0-times our FY25 non-GAAP projection. The two-year
average forward P/E of 10.4 is now above the historical P/E
(FY19-FY23) of 7.9. DELL is deeply discounted in relation to
multiples for the S&P 500, trading at a relative P/E of 0.54 on a
two-year forward basis, compared to an historical relative P/E of
0.41. Historical comparables value is in the mid-$60s, in a stable
trend and no longer above current prices.
Dell is trading at deep discounts to peers on absolute and
relative P/E, price/sales, and EV/EBITDA. Our peer calculated value
Argus Analyst Report
 NYSE: DELL

DELL TECHNOLOGIES INC

Report created Dec 4, 2023 Page 6 OF 7

Analyst's Notes ...Continued

for DELL is above $100, given its positive fundamentals and

reversal of the 2022 tech selloff on AI mania. On a discounted free
cash flow basis, we calculate a value above $200, now rising again
as the period of PC softness appears to be ending.
In all, our blended valuation for DELL is above $145, in a now
stabilizing trend. Appreciation to our 12-month target price of $90,
along with the 2.1% current yield, implies a total potential return,
on a risk-adjusted basis, in excess of our forecast market return and
is thus consistent with a BUY rating.
On December 4 at midday, BUY-rated DELL traded at $69.29,
down $0.64.

Please see important information about this report on page 7

©2023 Argus Research Company Argus Analyst Report

 NYSE: DELL

METHODOLOGY & DISCLAIMERS Report created Dec 4, 2023 Page 7 OF 7

About Argus
Argus Research, founded by Economist Harold Dorsey in 1934,
has built a top-down, fundamental system that is used by Argus
analysts. This six-point system includes Industry Analysis, Growth
Analysis, Financial Strength Analysis, Management Assessment,
Risk Analysis and Valuation Analysis.
Utilizing forecasts from Argus’ Economist, the Industry Analysis
identifies industries expected to perform well over the next
one-to-two years.
The Growth Analysis generates proprietary estimates for
companies under coverage.
In the Financial Strength Analysis, analysts study ratios to
understand profitability, liquidity and capital structure.
During the Management Assessment, analysts meet with and
familiarize themselves with the processes of corporate management
teams.
Quantitative trends and qualitative threats are assessed under
the Risk Analysis.
And finally, Argus’ Valuation Analysis model integrates a
historical ratio matrix, discounted cash flow modeling, and peer
comparison.
THE ARGUS RESEARCH RATING SYSTEM
Argus uses three ratings for stocks: BUY, HOLD, and SELL.
Stocks are rated relative to a benchmark, the S&P 500.
• A BUY-rated stock is expected to outperform the S&P 500 on
a risk-adjusted basis over a 12-month period. To make this
determination, Argus Analysts set target prices, use beta as the
measure of risk, and compare expected risk-adjusted stock
returns to the S&P 500 forecasts set by the Argus Market
Strategist.
• A HOLD-rated stock is expected to perform in line with the
S&P 500.
• A SELL-rated stock is expected to underperform the S&P 500.

Argus Research Disclaimer

Argus Research Co. (ARC) is an independent investment research provider whose parent company, Argus Investors’ Counsel, Inc. (AIC), is registered with the U.S. Securities and
Exchange Commission. Argus Investors’ Counsel is a subsidiary of The Argus Research Group, Inc. Neither The Argus Research Group nor any affiliate is a member of the FINRA or
the SIPC. Argus Research is not a registered broker dealer and does not have investment banking operations. The Argus trademark, service mark and logo are the intellectual
property of The Argus Research Group, Inc. The information contained in this research report is produced and copyrighted by Argus Research Co., and any unauthorized use,
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The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but Argus makes no representation as to their timeliness,
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© 2023 Morningstar, Inc. All Rights Reserved. Certain financial information included in this report: (1) is proprietary to Morningstar and/or its content providers; (2) may not be
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©2023 Argus Research Company Argus Analyst Report