Dell’s Descent

Dell’s (DELL) punishment continues. The stock is close to falling below $30 a share. It looks like today will mark the lowest close in over two years. The stock first broke through $30 seven years ago (adjusted for splits).
I try not to be surprised by what I see on the market, but the falloff in Dell’s stock is pretty stunning. Put it this way: Dell and GE (GE) are now trading at roughly 16.5 times next year’s earnings. Does anybody really that think these stocks have equal growth prospects? Dell’s earnings multiple is now less than Coca-Cola’s (KO).
The earnings report is due on November 10. To be conservative, Dell’s sales should grow around 14% or so. If Dell posts earnings of 42 cents a share or more, the stock could easily run to $40.

Posted by Eddy Elfenbein on October 28th, 2005 at 2:13 pm

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