Based on the aggregated intelligence of 165,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, computer giant Dell (Nasdaq: DELL) has received a distressing two-star ranking.

With that in mind, let's take a closer look at Dell's business and see what CAPS investors are saying about the stock right now.

Dell facts

Headquarters (founded)

Round Rock, Texas (1984)

Market Cap

$23.1 billion


Computer hardware

Trailing-12-Month Revenue

$58.2 billion


Founder/CEO Michael Dell

CFO Brian Gladden

Return on Capital (average past 3 years)


Compound Annual Revenue and Net Income Growth (over past 3 years)

(0.1%) and (18%)

1-Year Return



Hewlett-Packard (NYSE: HPQ)

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 29% of the 5,596 members who have rated Dell believe the stock will underperform the S&P 500 going forward. These bears include ExtraValu and All-Star mevanzzz, who is ranked in the top 10% of our community.

Earlier this month, ExtraValu went directly to the bearish point: "I just don't see the appeal here. They have zero innovation and are getting squeezed from all sides. Tech is hurting right now there's no chance that Dell can outperform in an environment like this."

Despite the sales progress Dell seems to be making in its shift away from purely PCs toward the higher-return enterprise solutions space, a la HP and IBM, its margins have yet to expand in any exciting manner. While the consumer products division now accounts for less than 20% of Dell's sales, Foolish tech expert Anders Bylund noted last week that Dell needs to focus even more on becoming a "single-minded mastodon of the data center."

With Apple (Nasdaq: AAPL) and Acer right on its heels in the American PC market, completely letting go of the consumer seems to be the best thing for Dell's long-term turnaround.  

But even then, CAPS All-Star mevanzz leaves us with a top-down reason to stay away:

Dell will be unable to achieve analysts' expectations in their second half of the year. $0.30 and $0.32 EPS are going to be difficult for the company to reach in the 3rd and 4th quarters, respectively. Corporate IT infrastructure spending will be lighter in the second half of the year than expected. Hiring has not picked up, and so companies will need less IT equipment than expected.

This may be a broader trend. Analysts may need to revisit their earnings estimates across the board for the second half of 2010, if recent economic trends continue.

What do you think about Dell, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Apple is a Motley Fool Stock Advisor selection. The Fool's disclosure policy always gets a perfect score.