Dell Technologies: Assessing Valuation After CFO Transition and Maintained Financial Guidance

If you’re holding Dell Technologies (DELL) or considering it for your next investment move, you may have noticed the sudden leadership change announced this week. Longtime CFO Yvonne McGill is stepping down after nearly three decades. David Kennedy is stepping in as interim leader of the finance team while the company searches for a permanent successor. Dell stated that McGill’s departure is not related to any issues with financial reporting or internal controls. The company reinforced this point by reaffirming its earnings guidance for the current quarter and full fiscal year.

These changes come as Dell Technologies is experiencing a period of clear momentum. Over the past year, shares have delivered a 16% return and nearly 7% since the start of the year. Although there has been some volatility in the past month, the longer-term view reveals substantial gains, with a three-year return close to 250%. Dell’s business performance has been solid, highlighted by recent earnings growth and demand for its AI-focused hardware. In this context, investors must weigh the short-term uncertainties of management turnover against positive signals from the company’s fundamentals and outlook.

With shares up for the year and Dell’s management reaffirming their outlook, the question remains whether there is more value to be realized or if the stock already reflects the anticipated next phase of growth.

Most Popular Narrative: 15% Undervalued

According to the most widely followed narrative, Dell Technologies shares are trading below fair value, with analysts seeing sizable upside due to the company's positioning in the AI and data center markets.

The rapid expansion of Dell's enterprise AI customer base and increasing enterprise-specific offerings (such as integrated AI factory solutions and PCIe options) improve both revenue visibility and margin potential. Enterprise customers typically require higher-value, higher-margin services and infrastructure, which benefits Dell.

What is fueling this target valuation? One part is Dell’s strategy shift toward high-impact, high-margin opportunities in enterprise tech. Want to know which aggressive forecasts about future revenue, profit margins, and buybacks underpin that price? See the narrative’s projections for the numbers guiding this bold upside call.

Result: Fair Value of $146.43 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent margin pressures from hardware commoditization and Dell's reliance on the cyclical PC segment could present challenges to the optimistic growth outlook.

Find out about the key risks to this Dell Technologies narrative.

Another View: Our DCF Model Weighs In

Taking a different approach, the SWS DCF model examines Dell Technologies’ future cash flows instead of market multiples. It also points toward the stock trading below its estimated fair value. But which method better captures Dell’s real story?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Dell Technologies for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Dell Technologies Narrative

If you find yourself with a different perspective or want to investigate Dell’s story using your own assumptions and data, you can easily craft a personalized view. It takes just a few minutes to get started. Do it your way.

A great starting point for your Dell Technologies research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.

Looking for More Investment Opportunities?

Momentum does not stop at Dell. Steer your portfolio towards fresh opportunities by checking out these hand-picked strategies using our Simply Wall Street Screener.

• Capture the income potential of reliable payers and spot stocks offering attractive yields with the help of dividend stocks with yields > 3%.
• Target tomorrow’s tech leaders by scanning for companies powering the next AI breakthroughs right now with AI penny stocks.
• Pinpoint hidden gems trading below their true worth and unlock value others might overlook using undervalued stocks based on cash flows.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com