Here’s How to Play Dell Inc. (DELL) Stock Now

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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.

Dell Inc.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?

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