Motley Fool Stock Advisor recommendation Dell (NASDAQ:DELL) beat expectations with its fourth-quarter results. Revenue increased 13% over the comparable year-ago quarter, and net income, benefiting from a lower tax rate, shot up 52%. Both numbers benefited from an extra sales week this quarter.

Don't let the headline numbers distract you from looking a little deeper. What looks like another great quarter is, quite frankly, just one side of the story. A step back reveals that last year's fourth-quarter net income was reduced $0.11 a share for a charge to repatriate foreign earnings -- thereby pushing comparable earnings down. Look a little above today's bottom line, to the 6% increase in income before income taxes, and the real results become apparent. Earnings growth was less than half the percentage increase in revenue, only 7% once adjusted to reflect the impact of the aforementioned.

There are a number of negatives to consider. Gross margins fell 70 basis points. And favorable variances in operating expenses, sales, and general and administrate expenses were not enough to keep operating margins from falling 60 basis points.

That's not to say there's not a lot to like about Dell. The company reported what has become increasingly apparent: Its business model, which is producing great results from Germany to China, works throughout the world. Those successes led to $1.6 billion in cash from operations last quarter.

Dell used its strong cash flow to purchase $2 billion in the company's stock in the fourth quarter, which acted to reduce the weighted average shares outstanding by 7% year over year. The company plans to spend at least $1.2 billion in the current quarter to retire even more shares. These moves make sense given the company's strong cash position, modest capital needs, 15% expected annual growth for the next five years, and hardly rich valuation of about 17 times expected current year (forward) earnings.

Dell's stock was down as much as 5% in Friday's morning trading, mostly because of the company's first-quarter outlook. Dell sees revenue of $14.2 billion to $14.6 billion; the average analyst expectation was for $14.8 billion. The analysts' earnings projection of $0.42 also exceeds the $0.39 to $0.41 a share the company expects.

But Dell's stock is slipping into value territory. It has lost one-fourth of its value over the last 52 weeks. While competitor Hewlett-Packard (NYSE:HPQ) is showing strength, its expected earnings growth rate and trailing operating margins are still well below that expected at Dell.

Dell's story has two sides. On the negative, there are reasons to be concerned about the overall level of margins, and profit growth that reasonably mirrors that of sales. On the positive, there is continued strong cash flow and a shrinking share base. Given Dell's growth opportunites, the stock looks value-priced.

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Fool contributor W.D. Crotty does not own any shares in the companies mentioned. Click here to see The Motley Fool's disclosure policy.