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):
|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|
|Cash from operations||$3.38 billion||$55.26 billion||$13.02 billion|
And here’s what Fools say, going by the data available in our CAPS investor intelligence database:
|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|
Fools have expressed mixed views of the Dell Inc. (NASDAQ:DELL)’s go-private plan for months. The last CAPS All-Star to weigh in abandoned the stock in April. “PC sales [fell off] much steeper than I expected,” wrote Flygal5 in giving the stock a thumbs-down rating in CAPS. “I was wrong on this one, got to stop listening to Southeastern Asset Management.”
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?