Increasing dependence on technology and its growing influence and influence across various end-use sectors has led to a significant increase in the demand for technology products and services. Therefore, investors can also consider investing in Dell Technologies (DELL) and Dropbox (DBX), which are solid tech stocks, but wait for a better entry point in Motorola Solutions (MSI). I think that is the best.
The U.S. technology industry is a global powerhouse, driving innovation, economic growth, and job creation. The technology industry also plays a vital role in shaping trends in society, from the way people communicate and work to the way businesses operate. According to Gartner’s latest forecast, global IT spending is expected to reach $5.1 trillion this year, an 8% year-on-year increase.
Despite the macroeconomic challenges of the past year, global digital transformation continues unabated. Additionally, demand for innovative technology solutions is expected to increase significantly from this year onwards, with key spending areas identified in communications services, software, devices, data center systems and IT services.
While strong economic growth in the United States is a major driver of the IT services market, increasing urbanization in developing countries around the world is also boosting the industry. The US IT services market revenue is expected to reach $495.3 billion this year and further grow at a CAGR of 6.2% until 2028.
When it comes to the technology hardware industry, digital transformation and increasing adoption of trends are increasing the demand for advanced hardware. The sector is also being driven by the proliferation of cloud services, artificial intelligence (AI), blockchain, Internet of Things (IoT), and machine learning.
The IT hardware market is expected to grow at a CAGR of 7.9% and reach $191.03 billion by 2029.
Given the encouraging trends, let’s now examine the core fundamentals of the three technology stocks mentioned.
Stocks to buy:
Dell Technologies, Inc. (Dell)
DELL designs, develops, manufactures, markets, sells and supports a variety of comprehensive and integrated solutions, products and services in the Americas, Europe, the Middle East, Asia and internationally. The company operates through its two segments: Infrastructure Solutions Group (ISG) and Client Solutions Group (CSG).
DELL’s trailing twelve month net profit margin of 2.92% was 24% higher than the industry average of 2.36%, and its trailing twelve month EBIT margin of 5.39% was 9.5% higher than the industry average of 4.92%.
On December 19, DELL announced pricing terms for a cash tender offer in which it will accept $350 million in 3.450% senior notes due in 2051 and $150 million in 8.350% senior notes due in 2046. It was announced that there is.
That same month, DELL announced a quarterly cash dividend of $0.37 per common share, payable on February 2, 2024. The $1.48 annual dividend yields 1.76% at current market prices, which is higher than the past four-year average of $0.95. %.
DELL reported total net revenues of $22.25 billion for the fiscal third quarter ended November 3, 2023. This includes product revenue of $16.23 billion and service revenue of $6.02 billion. Non-GAAP operating expenses were $3.31 billion, down 5% from the prior year. The company’s non-GAAP net income was $1.39 billion, or $1.88 per share.
Analysts expect DELL’s revenue and EPS to increase 3.6% year-over-year to $21.67 billion and EPS to increase 10.6% to $1.72 for the fiscal first quarter ending April 2024. . DELL has consistently exceeded consensus EPS estimates over the past four quarters, indicating strong performance. .
DELL stock closed its last trade at $84.22, returning 105.5% over the past year and 30.6% over the past three months.
DELL’s POWR rating reflects DELL’s promising outlook. The stock has an overall rating of ‘A’, which equates to a ‘Strong Buy’ according to our proprietary rating system. POWR ratings are calculated by considering 118 different factors, with each factor weighted to the best degree.
It has an A grade for sentiment and a B grade for growth, value, and momentum. Ranked #7 out of 36 stocks in the A-rated Technology – Hardware industry.
In addition to the above, DELL is also recognized for quality and stability. Get all reviews for DELL here.
Dropbox Inc. (DBX)
DBX provides a content collaboration platform worldwide. The company’s platform allows individuals, families, teams, and organizations to collaborate through its websites and apps, sign up for free, or upgrade to a paid subscription plan for premium features.
DBX’s trailing twelve month net profit margin of 22.50% was 984.4% higher than the industry average of 2.07%. The company’s trailing 12-month leveraged FCF margin was 30.52%, which is 242.4% higher than the industry average of 8.92%.
DBX’s revenue for the fiscal third quarter ended September 30, 2023 increased 7.1% year over year to $633 million. Gross profit improved 6.7% year over year to $513.4 million. The company’s net income and net income per share were $114.1 million and $0.33, respectively, an increase of 37.1% and 43.5% year over year.
Additionally, operating revenue was $130.7 million, an increase of 46.4% year over year.
DBX’s EPS and revenue are expected to be $0.48, or $631.68 million, for the fourth quarter ending December 2023, up 20.9% and 5.5% year-over-year. It beat consensus EPS and revenue estimates in each of the trailing four quarters. is impressive.
Shares have increased 53.7% over the past nine months, closing the last trade at $32.10. It has risen 21.7% in the past three months.
DBX’s POWR Rating reflects this positive outlook. This stock has an overall rating of B, which equates to a “buy” according to our proprietary rating system.
The quality grade is A and the value grade is B. It ranks #5 in the Technology – Services industry with 75 stocks.
Click here to see DBX’s assessment of Growth, Stability, Momentum, and Sentiment.
Stock held:
Motorola Solutions Corporation (MSI)
MSI provides public safety and corporate security solutions in the United States, United Kingdom, Canada and internationally. The company operates in two segments: Products and Systems Integration, and Software and Services.
MSI’s gross profit margin for trailing twelve months was 49.54%, which was 1.48% higher than the industry average of 48.82%. The company’s trailing 12-month asset turnover ratio was 0.82x, which is 32.6% higher than the industry average of 0.62x.
In December, MSI acquired IPVideo, known for its HALO smart sensor, a versatile device that monitors health and safety threats in real time, including e-cigarette detection, air quality monitoring, and gunshot detection. The move underscores MSI’s commitment to improving safety and security through cost-effective and privacy-conscious sensor solutions.
The company pays an annual dividend of $3.92 and has a yield of 1.20% at prevailing price levels. Over the past three years he has increased his dividends at a CAGR of 11.2%.
MSI’s revenue for the fiscal third quarter ended September 30, 2023 was $2.56 billion, an increase of 7.7% from the same period last year. The company’s non-GAAP operating income increased 9.6% year over year to $741 million, resulting in positive non-GAAP EPS. was $3.19, representing a 6.3% increase year over year.
The company revised its revenue outlook to $9.93 billion to $9.945 billion (previously $9.875 billion to $9.9 billion) and EPS of $11.65 to $11.70 per share (previously $11.40 per share). ~$11.48).
The Street expects MSI’s EPS and revenue to increase slightly by 4.1% year-over-year to $363 million and $2.82 billion in the fourth quarter ending December 2024. Impressively, MSI has surpassed consensus EPS and revenue estimates in each of the last four quarters. .
The company’s shares have soared 26.8% over the past year, but fell slightly during the day to close at $326.10.
MSI’s POWR rating is consistent with this uncertain outlook. The stock has an overall rating of C, which equates to Neutral under our proprietary rating system.
Momentum and stability are C grade. Ranked #13 out of 46 stocks in the Technology – Telecommunications/Networking industry.
Access MSI’s Value, Growth, Sentiment and Quality Ratings here.
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DELL stock was trading at $84.04 per share on Monday morning, down $0.18 (-0.21%). Year-to-date, DELL has increased his 10.35%. In comparison, the benchmark S&P 500 index rose 2.53% during the same period.
About the author: Kritika Sarma
An interest in risky financial products and a passion for writing led Kritika to become an analyst and financial journalist. She earned a Bachelor’s degree in Commerce and is currently enrolled in the CFA program. She aims to help investors identify untapped investment opportunities with her fundamental approach. more…
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