In a recent meeting with securities analysts in New York, Dell Technologies reiterated its annual revenue growth expectations of 3% to 4%. Additionally, the PC and enterprise-hardware company raised its adjusted profit growth target to 8% or better, up from a previous forecast of 6%. This upward revision reflects Dell’s confidence in its performance.
The company also announced enhancements to its shareholder-friendly initiatives. Dell now plans to return 80% of free cash flow to shareholders, a significant increase from the previous target range of 40% to 60%. Moreover, it has increased its stock repurchase plan by $5 billion and committed to boosting its dividend by 10% or more annually through fiscal 2028. With a current dividend yield of 2.2%, Dell demonstrates its dedication to returning value to shareholders.
According to Evercore ISI analyst Amit Daryanani, while the unchanged revenue growth forecast may seem conservative, he acknowledges the positive impact of generative artificial intelligence in driving future growth. He describes these AI-driven tailwinds as not only building but also persisting over time. Despite finding the stronger capital returns constructive, Daryanani notes that the unaltered revenue projection is slightly disappointing.
In Thursday trading, Dell’s stock experienced a 1.6% decline, settling at $66.15. Moving forward, investors will closely observe Dell Technologies’ ability to achieve its predicted revenue and profit growth while delivering lucrative returns to its shareholders.
Dell’s Growth and Vision
Dell, a leading technology company, is anticipating steady expansion in its client-solutions and infrastructure solutions groups. The company predicts a 2% to 3% growth in its client-solutions group, primarily focusing on PCs. Additionally, Dell expects a growth rate of 6% to 8% in its infrastructure solutions group, encompassing servers, storage, networking hardware, and enterprise-software products. Notably, Dell projects its net income to convert into adjusted free cash flow at a rate of 100% or better.
During a recent meeting, Chairman and CEO Michael Dell reemphasized the company’s aspiration of being included in the S&P 500 index. He expressed his confidence in Dell’s ability to ride the upcoming wave of technological advancement and progress, particularly in workplace solutions, multicloud, intelligence at the edge, AI, and GenAI. Dell’s established leadership positions across various domains further solidify its belief in sustained value creation for all shareholders in the years to come.
It’s worth highlighting that Dell has made significant strides in reducing its core debt position after completing the acquisition of EMC in 2017. The company has impressively decreased its core debt from $48.9 billion to $14.6 billion.
- Eric J. Savitz