What a time it’s been for Dell. In the past six months alone, the company’s stock price has increased by a massive 77%, setting a new 52-week high of $165.99 per share. This was partly due to its solid quarterly results, and the run-up might have investors contemplating their next move.
Is now the time to buy Dell, or should you be careful about including it in your portfolio? See what our analysts have to say in our full research report, it’s free for active Edge members.
Why Is Dell Not Exciting?
We’re glad investors have benefited from the price increase, but we're sitting this one out for now. Here are three reasons there are better opportunities than DELL and a stock we'd rather own.
1. Long-Term Revenue Growth Disappoints
A company’s long-term sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Regrettably, Dell’s sales grew at a sluggish 2.9% compounded annual growth rate over the last five years. This fell short of our benchmarks.
2. Weak ARR Growth Points to Soft Demand
We can better understand Hardware & Infrastructure companies by analyzing their ARR, or annual recurring revenue. This metric shows how much Dell expects to collect from its existing customer base in the next 12 months, giving visibility into its future revenue streams.
Over the last two years, Dell’s ARR averaged 3.6% year-on-year growth. This performance was underwhelming and suggests that increasing competition is causing challenges in securing longer-term commitments. 
3. Free Cash Flow Margin Dropping
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
As you can see below, Dell’s margin dropped by 6.6 percentage points over the last five years. If its declines continue, it could signal increasing investment needs and capital intensity. Dell’s free cash flow margin for the trailing 12 months was 4.8%.
Final Judgment
Dell’s business quality ultimately falls short of our standards. After the recent surge, the stock trades at 15.8× forward P/E (or $165.99 per share). This valuation multiple is fair, but we don’t have much faith in the company. We're fairly confident there are better investments elsewhere. We’d suggest looking at a top digital advertising platform riding the creator economy.
Stocks We Would Buy Instead of Dell
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
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