What happened
Shares of Dell Technologies (DELL -0.36%) slumped 10.3% in February, according to data from S&P Global Market Intelligence. The tech stock saw sell-offs in conjunction with its fourth-quarter earnings release and bearish pressures impacting the broader market
Dell published its fourth-quarter results on Feb. 24, posting sales that came in ahead of the market's targets and earnings that fell short of the average analyst estimate. The company recorded non-GAAP (adjusted) earnings per share of $1.72 on revenue of $28 billion, while the average analyst target had called for adjusted earnings of $1.95 per share on revenue of $27.32 billion.
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So what
Dell sales climbed 16% year over year in the fourth quarter, and adjusted operating income rose 1% compared to the prior-year period. For the full year, the company's sales grew 17% year over year to reach $101.2 billion thanks to strong growth across business segments and record PC shipments. Adjusted earnings were up 27% annually, reaching $6.22 per share.
Now what
Despite selling pressures impacting the broader market, Dell stock has regained some ground in March. The company's share price is up roughly 3.5% in the month as of this writing.
DELL data by YCharts.
While growth-dependent tech stocks have faced continued bearish pressures early in March, Dell continues to look conservatively valued. The company now has a market capitalization of roughly $39 billion and is valued at approximately 7.6 times this year's expected earnings and less than 40% of this year's expected sales.
Last year, Dell completed the spin-off of its previously held majority ownership position in cloud-computing company VMware, and the company has quickly moved to pass some of the proceeds from the deal along to shareholders. With its fourth-quarter release, management also announced that it was initiating a dividend, with its first quarterly payment coming out to $0.33 per share. Based on the company's current stock price, that suggests a forward yield of roughly 2.5%. It expects to return between 40% and 60% of free cash flow to shareholders in the form of dividends and stock buybacks, and it continues to guide for a long-term compound annual earnings growth rate of 6%.
