Dell Technologies Inc. (NYSE:DVMT) and HP Inc. (NYSE:HPQ) are both Technology companies that recently hit new highs. Many investors are wondering what to do with these names trading at such extreme levels. To determine if one is a better investment than the other, we will compare the two across growth, profitability, risk, return, dividends, and valuation measures.
Dell Technologies Inc. (NYSE:DVMT) operates in the Diversified Computer Systems segment of the Technology sector. The company has grown sales at a -0.10% annual rate over the past five years, putting it in the low growth category. DVMT has a net profit margin of -4.50% and is less profitable than the average company in the Diversified Computer Systems industry. In terms of efficiency, DVMT has an asset turnover ratio of 0.66. This figure represents the amount of revenue a company generates per dollar of assets. DVMT’s financial leverage ratio is 7.15, which indicates that the company’s asset base is primarily funded by debt. Company’s return on equity, which is really just the product of the company’s profit margin, asset turnover, and financial leverage ratios, is -30.50%, which is worse than the Diversified Computer Systems industry average ROE.
Stock’s free cash flow yield, which represents the amount of cash available to investors before dividends, expressed as a percentage of the stock price, is 2.45. The average investment recommendation for DVMT, taken from a group of Wall Street Analysts, is 1.00, or a strong buy.
Over the past three months, Dell Technologies Inc. insiders have been net buyers, dumping a net of -786,852 shares. This implies that insiders have been feeling relatively bearish about the outlook for DVMT.
HP Inc. (NYSE:HPQ) operates in the Diversified Computer Systems segment of the Technology sector. HPQ has increased sales at a -15.40% CAGR over the past five years, and is considered a low growth stock. The company has a net profit margin of 4.90% and is more profitable than the average Diversified Computer Systems player. HPQ’s return on equity of -63.00% is worse than the Diversified Computer Systems industry average.
HP Inc. (HPQ) pays a dividend of 0.56, which translates to dividend yield of 2.74% based on the current price. Stock has a payout ratio of 35.40%. According to this ratio, HPQ should be able to continue making payouts at these levels. The company trades at a free cash flow yield of 0.83 and has a P/E of 13.76. Compared to the average company in the 16.34 space, HPQ is relatively cheap. The average analyst recommendation for HPQ is 2.30, or a buy. The average analyst recommendation for HPQ is 2.30, or a buy.
HP Inc. insiders have sold a net of -2,012,578 shares during the past three months, which implies that the company’s top executives have been feeling bearish about the stock’s outlook. Finally, HPQ’s beta of 1.76 indicates that the stock has an below average level of market risk.
Dell Technologies Inc. (NYSE:DVMT) scores higher than HP Inc. (NYSE:HPQ) on 8 of the 13 measures compared between the two companies. DVMT has the better fundamentals, scoring higher on growth and return metrics. DVMT wins on valuation measures. DVMT has better insider activity and sentiment signals.