Dell Looks Big and Blue, but It Still Ain't Quite Big Blue

Shares of Dell (Nasdaq: DELL  ) hit a 52-week low today. Let's look at how it got here and whether more pain is in store.

How it got here
The iconic PC maker has seen better days. In recent times the company has acknowledged that its core PC business ain't what it used to be, attempting to expand aggressively into software and services in order to become an IT player. It's a similar move to what IBM (NYSE: IBM  ) first pulled off successfully, and Dell is following in the same acquisitive footsteps.

Second-quarter PC shipment estimates show Hewlett-Packard (NYSE: HPQ  ) and Dell both continuing to bleed market share to Asian players that are more cost competitive, while the overall market stagnates in the face of tablet cannibalization, led by Apple's (Nasdaq: AAPL  ) iPad.

Dell has numerous challenges, including these three reasons to sell the stock. The company's most recent earnings release showed progress toward the end goal of IT transformation, but in the interim both top and bottom lines continue to shrink.

How it stacks up
Let's see how Dell compares to its competitors and peers.

DELL Chart

DELL data by YCharts.

We'll add some fundamental metrics into the comparison.

Company

P/E (TTM)

EPS growth (TTM)

Net margin (TTM)

ROE (TTM)

Dell 6.7 (9.5%) 5.0% 33.5%
HP NM (166.7%) (4.5%) (15.8%)
Apple 15.6 68.4% 27.0% 44.3%
Microsoft (Nasdaq: MSFT  ) 15.1 (25.9%) 23.0% 27.5%
IBM 14.2 11.5% 15.3% 74.7%

Source: Reuters. TTM = trailing 12 months. NM = not meaningful.

HP's figures look particularly terrible in light of its massive $10.8 billion writedown last quarter, erasing the past six quarters' worth of profits. Microsoft shows symptoms of the same ailment thanks to its own $6.2 billion writedown. Apple's metrics are envious. Its mobile devices continue to sell record units and its Macs are differentiated from Windows PCs. Looking at IBM's digits shows why Dell and HP both have so much Big Blue envy.

What's next?
Dell is hoping for Windows 8 to reinvigorate its core PC business and also to provide it with an entry into the tablet market. In the meantime, investors can expect the company to continue making small acquisitions to piece together its Big Blue puzzle.

Microsoft is also seeing some important strategic shifts as it gets into tablet hardware. Still, its core businesses are as strong as ever and the stock is underappreciated in many ways. This premium report will tell you how.

Fool contributor Evan Niu owns shares of Apple, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Microsoft, International Business Machines, and Apple. Motley Fool newsletter services have recommended buying shares of Apple and Microsoft. Motley Fool newsletter services have also recommended creating a synthetic covered call position in Microsoft,  a bull call spread position in Apple, and a synthetic long position in International Business Machines. The Motley Fool has a disclosure policy.
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