Dell Earnings on Deck (DELL, AAPL, HPQ)

Dell Inc. (NASDAQ: DELL) is about to report earnings.  Thomson Reuters has estimates for the former PC-leader at $0.23 EPS and $12.59 billion in revenues.  For next quarter those targets are $0.26 EPS on $12.86 billion in revenues.  Based on how this chart looks and how the stock has risen so much, this company probably has to really outperform for the run to keep much strength.

Dell’s stock is up considerably from its lows.  With shares at $14.75, its 50-day moving average is $13.54 and its 200-day moving average is $11.25.  In mid-July we saw shares hitting as low as $12.00 and it was barely above $11.00 in early June.  Dell could pull back $1.00 or $1.50 before any significant technical flags would be thrown up.

Even a review of options trading is not showing much for an expected move.  One screen shows that options traders are pricing in a direction move of up to $0.75 and another screen shows a directional expectation of up to $1.05.  That is because there are 22 days before September options expiration date is here.

As far as analysts are concerned, we show the average estimate for analysts targets is right here where the stock is…. $14.75 to $15.00.  So again, one more reason for Dell to really have to beat estimates to continue its run… The only recent upgrade came from Broadpoint AmTech, which raised its rating to Buy from Neutral based upon demand improving.

With Apple Inc. (NASDAQ: AAPL) getting more and more PC market share and with so much move still heading into netbooks, we are fairly certain about the direction of average selling prices and ultimately margins.  Rival Hewlett-Packard Company (NYSE: HPQ) has traded in a very tight range of less than $2.00 since its earnings report, yet its share price is almost triple that of Dell.

JON C. OGG
August 27, 2009