Dell

(DELL) - Get Report

will show off its first-quarter financial results after Thursday's closing bell, but even more scrutinized will be the computer maker's predictions about the second quarter.

The Round Rock, Texas-based company stuck by its financial targets as recently as April 7, so most analysts aren't expecting Dell to post results markedly different from those goals.

Still, Dell's stock is in a precarious position following a slide this year to a six-month low under $35 last week. Investors are focused on growth prospects for Dell as it gets larger and continues to test new markets to feed its expansion. The stock's fall this year has come even as the company posted

strong fourth-quarter earnings and held an

analyst meeting that outlined long-term business plans.

Dell announced in early April that it expected first-quarter earnings of 37 cents a share and sales of $13.4 billion -- consistent with targets issued at the quarter's start -- on sequential shipment growth of 21%. Analysts followed the company's cues and have aligned their expectations to match Dell's.

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Dell also said last month that it would buy back $2 billion in stock during the first quarter -- more than double the company's original expectation. Its stock currently trades at $36.54, down from $42, a 4 1/2-year peak hit in December.

"They are in a constant situation where they are balancing pricing and margins against revenue growth," says Bill Gorman, vice president of equity research with PNC Advisors, a $50 billion money management firm.

But Gorman says the stock is undervalued, adding that Wall Street's consensus earnings target for this year has been inching higher recently. Dell is currently expected to earn $1.60 a share for 2005, up from $1.57 three months ago. Positive momentum for expected earnings is a good thing, despite the latest breakdown in Dell's shares.

Dell has been doing its best to communicate that its growth days aren't behind it: The company has set a goal of boosting annual sales in the next three or four years to $80 billion from $49 billion last year.

Dell has targeted network servers, storage systems, printing and imaging, mobile computing and services as growth areas. Dell and its hyperefficient supply chain make it the envy of anyone with a factory. Investors will get a read on Dell's offerings Thursday, when the company breaks down sales into product lines for the first time.

Of course, some of the bottom-line expansion is coming from financial machinations as opposed to outstanding sales growth or operating improvements. Dell's tax rate is on the decline and is expected to drop this year to 24.3% from 31.5%. Earnings also should benefit from a stepped-up share-repurchase plan.

While these levers aren't bad ones to be able to pull, the selloff in Dell stock so far this year illustrates investors' preference for earnings growth driven by higher margins and stronger sales growth.

The first two quarters of the year are typically tough in that regard, but the possibility exists in the back half of the year. The degree to which fatter margins and stronger sales materialize remains a deciding factor as to where the stock goes from here.