Dell: Shrinking Backlog And Margin Pressures (Archive)

This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.

Elevator Pitch

• Backlog indicators as seen in the remaining performance obligations are shrinking and high-growth products such as AI-servers are expected to see QoQ revenue declines next quarter, with a flat backlog.
• Competitive intensity is increasing, and industry data shows that Dell is losing share in global PC shipments and mainstream servers.
• A revenue mix shift toward lower-margin AI-servers and pricing pressures are headwinds to gross margins going ahead.
• Dell is trading at a slight premium to sectoral peers, which I think reduces the margin of safety for buys given a tough competitive environment.
• Relative technicals show a monthly bullish trend, which is a silver lining. However, there are weekly obstacles ahead that, I think, will inhibit upside vs the S&P 500.

Read the full article here.