Like a commuter caught in an early evening traffic jam, Dell Inc. (NASDAQ:DELL) stock is stuck under $13.65 a share. Investors don’t believe Carl Icahn’s $14 bid is serious, even if the fight between Icahn and Michael Dell is all that and more.
“Can you imagine a real estate broker running advertisements warning of termite danger in a house each time a prospective buyer seems interested?” Icahn wrote in an open letter to shareholders.
He’s referring to a late March filing in which Dell Inc. (NASDAQ:DELL) described its prospects as bleak enough to require a total overhaul of the business, an overhaul best executed as a private entity. Who’s right?
Let’s address that question in context. Here’s a by-the-numbers look at how Dell Inc. (NASDAQ:DELL) stock compares to peers Apple Inc. (NASDAQ:AAPL) and Hewlett-Packard Company (NYSE:HPQ):
| Key Statistics | Dell | Apple | HP |
|---|---|---|---|
| Current share price | $13.48 | $432.25 | $25.44 |
| Shares outstanding | 1.76 billion | 938.6 million | 1.93 billion |
| Market cap | $23.7 billion | $405.5 billion | $49.1 billion |
| Trailing P/E ratio | 12.74 | 10.31 | Not available |
| PEG ratio | 2.24 | 0.52 | Not available |
| Gross margin | 21.1% | 39.5% | 23.6% |
| Cash from operations | $3.38 billion | $55.26 billion | $13.02 billion |
Sources: S&P Capital IQ and Yahoo! Finance.
And here’s what Fools say, going by the data available in our CAPS investor intelligence database:
| CAPS Category | Dell | Apple | HP |
|---|---|---|---|
| CAPS stars (out of 5) | ** | **** | ** |
| No. of CAPS ratings | 5,686 | 30,076 | 3810 |
| Bullish CAPS ratings | 3,982 | 27785 | 3406 |
| Bearish CAPS ratings | 1,704 | 2291 | 404 |
| Bull ratio | 70% | 92.4% | 89.4% |
Source: Motley Fool CAPS.
Ouch! I’m not so sure Southeastern deserves such harsh criticism.
Verdict: Sell Dell stock now
And yet it’s worth noting that Southeastern has sold half its stake in Dell Inc. (NASDAQ:DELL) to Icahn. Explaining the move in a statement to Businessweek, the firm said Icahn is “in the best position” to lead the fight for a better offer. I suppose just saying “we have to move on” would have been too forward?
