TSC Ratings' Updates: Dell

The following ratings changes were generated on Friday, Feb. 27.

We've downgraded Dell(DELL Quote) from hold to sell, driven by its deteriorating net income, poor profit margins, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Net income fell by 48.3% since the year-ago quarter, from $679 million to $351 million, underperforming the S&P 500 and the computers and peripherals industry. Dell's 18.7% gross profit margin is rather low, having decreased from the same quarter last year, and its net profit margin of 2.6% significantly trails the industry average. Net operating cash flow feel by 39.1% to $729 million compared with the year-ago quarter. Earnings per share declined by 41.9%, though the consensus estimate suggests that the company's yearlong trend of declining EPS should reverse in the coming year. ...