Dell Inc. Earnings Cheat Sheet: Strong Margins Continue as Net Income Rises

S&P 500 (NYSE:SPY) component Dell Inc. (NASDAQ:DELL) reported net income above Wall Street’s expectations for the third quarter. Dell is a technology company that offers desktop PCs, software and peripherals, servers, and networking and storage services to customers worldwide.

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Dell Earnings Cheat Sheet for the Third Quarter

Results: Net income for the personal computer company rose to $893 million (49 cents per share) vs. $822 million (42 cents per share) in the same quarter a year earlier. This marks a rise of 8.6% from the year earlier quarter.

Revenue: Fell 0.2% to $15.37 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: DELL reported adjusted net income of 54 cents per share. By that measure, the company beat the mean estimate of 47 cents per share. It fell short of the average revenue estimate of $15.69 billion.

Key Stats:

Last quarter marked the fifth consecutive quarter of gross margins expanding as the company’s gross margin expanded 3.1 percentage points to 22.6% from the year earlier quarter. Over that span, margins have grown on average 4.3 percentage points per quarter on a year-over-year basis.

The company has now seen net income rise in three straight quarters. In the second quarter, net income rose 63.3% and in the first quarter, the figure rose more than twofold.

A year-over-year revenue decrease last quarter snaps a streak of four consecutive quarters of revenue increases. The best quarter in that span was the third quarter of the last fiscal year, which saw revenue rise 19.4%.

The company has now topped analyst estimates for the last four quarters. It beat the mark by 5 cents in the second quarter, by 12 cents in the first quarter, and by 16 cents in the fourth quarter of the last fiscal year.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the fourth quarter has moved down from 46 cents a share to 45 cents over the last thirty days. Over the past three months, the average estimate for the fiscal year has climbed from $1.91 per to share to $2.01.

Competitors to Watch: Hewlett-Packard Company (NYSE:HPQ), Apple Inc. (NASDAQ:AAPL), Silicon Graphics Intl. Corp (NASDAQ:SGI), Super Micro Computer, Inc. (NASDAQ:SMCI), Intl. Business Machines Corp. (NYSE:IBM), Cray Inc. (NASDAQ:CRAY), EMC Corporation (NYSE:EMC), Microsoft Corporation (NASDAQ:MSFT), and Intel Corporation (NASDAQ:INTC).

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)