Dell Technologies Inc. (NYSE:DELL) was named the better operator of the two by Jim Cramer on Mad Money on October 6, in a segment that still called Hewlett Packard Enterprise the cheaper stock.
Dell traded at around $573 on October 6, up 3.80% on the day, while Hewlett Packard Enterprise traded near $71. Cramer was precise about the trade-off. “I am not ready to say that I like HPE more than Dell because Dell’s best of breed,” he said, before adding that the other stock “acts a lot cheaper given the lower valuation.”
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The Gap Is in the Forward Multiple, Not the Trailing One:
Cramer put Dell at “18 times” earnings. The forward multiple is at around 20 times, which is close to the figure he was working from. Hewlett Packard Enterprise trades at 15.01 times forward earnings. That is the gap, and it is about five turns wide.
The trailing numbers say the opposite. Dell is at 33.33 times trailing earnings against 36.43 at Hewlett Packard Enterprise. So the cheaper stock is only cheaper on next year’s estimates. On the year just finished, it is the more expensive of the two.
The entire valuation case therefore rests on forecasts rather than on results already reported. Billionaire investors hold ten semiconductor stocks. The one ranked first has returned 24% since June.
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Why Dell Keeps the Operator Title:
The operating numbers explain the preference better than the multiples do. Dell grew revenue 57.70% in the most recent quarter against 33.70% at Hewlett Packard Enterprise, from a base more than three times larger.
Dell turned that into $11.38 billion of net income over the past twelve months. Hewlett Packard Enterprise earned $2.68 billion. The margins complicate it. Gross margin is 36.62% at Hewlett Packard Enterprise against 19.91% at Dell, which is the widest operating gap between them.
Yet net margin lands at 7.52% for Dell and 6.67% for its rival. A current ratio of 0.96 shows how. Dell’s suppliers and customers fund the working capital, so less of the gross margin is consumed before it reaches the bottom line. One balance sheet item separates them completely. Dell carries a book value of negative $2.23 a share after years of buybacks, while Hewlett Packard Enterprise holds $19.96.
We named ten stocks for the year ahead in October. What put the first one on top is explained here.
The Valuation Case:
Dell traded at around $573 on October 6 and is worth $364.50 billion. Sustainability is the real question for both, because AI server demand is the only reason either multiple expanded.
On price, the measures disagree by design. Dell is at 2.41 times sales against 2.24 at Hewlett Packard Enterprise, which is close enough to be the same number. Enterprise value to EBITDA of 21.15 at Dell against 15.23 is the clearer separation, and it counts the $35.28 billion of debt Dell carries.
On free cash flow, the gap is wider than the multiples suggest. Dell yields 2.3% of its market value in free cash against 4.4% at Hewlett Packard Enterprise, which is the cheapness Cramer is pointing at without needing anyone’s forecast.
Conclusion:
Cramer is making a quality argument and a price argument at the same time, and they point in opposite directions. Dell grew quarterly revenue 57.70% and earned $11.38 billion against $2.68 billion, which is the operator case. However, the cheaper label only holds on forward estimates at 15.01 times against 19.69. On trailing earnings, Hewlett Packard Enterprise is the more expensive stock at 36.43 times. The number to watch is gross margin, because 19.91% at Dell is what the better operator has to keep defending.
Market Sentiment:
Dell Technologies Inc. was held by 77 hedge funds with a combined stake value of about $3.57 billion at the end of Q2 2026 in the Insider Monkey database. This is up from 72 hedge fund holders with a cumulative investment value of around $1.67 billion in the previous quarter.
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This article is originally published at Insider Monkey.
