• Dell Technologies is selling for only 0.48 P/S and 8.6x FWD EV/EBITDA.
• Valued at $41.45B with $53.521B in debt.
• Goodwill and intangibles make up over $62B of $111B of total assets.
• Despite selling at a low multiple, Dell has too much debt and intangible assets along with poor earnings to consider buying.

Dell Technologies (DELL), just off another public offering, is selling for a cheap valuation in terms of price to forward non-GAAP earnings and sales, yet has way too much debt to buy. Many bull cases are using EBITDA to evaluate Dell which is eliminating the larger problem and covers up the issues with profitability. Following Benjamin Graham's value investing strategies, we are not only looking for solid profitable companies with growth opportunities, but we must ensure that we are buying them at a reasonable or low price. The important part here is to determine if the issue is selling cheaply enough to consider buying. Dell logged a GAAP diluted EPS of $0.38 in Q1 and a Non-GAAP diluted EPS of $1.45. Dell has not had a positive year since 2013 providing some worry about the reliability of these earnings.

Data by YCharts

Dell Earnings Reports Under a Microscope:

Dell logged a GAAP EPS of $0.38 per share in Q1 of their 2020 fiscal year(starts beginning of February). The Non-GAAP EPS was $1.45 crushing analyst projections by $0.25, but missing revenue numbers by over $250 million. While this looks like a solid entry into profitability for the company, looking closer at the income statement tells a different story. On the GAAP report, Dell actually lost money with an operating income of $550 million followed by "Interest and Other, net" expense of $693 million netting a loss of $143 million. This would come out to a loss of $0.1855 per share. However, a tax break accounts for $472 million thrusting the quarterly loss into a quarterly profit, but not due to operations.

The cheap FWD P/E is also using Non-GAAP earnings, which Dell has repeatedly thrown out over a billion dollars' worth of expenses thus explaining the huge jump from a GAAP EPS of $0.38 to a Non-GAAP EPS of $1.45.

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