The computer hardware industry produces desktops, laptops, personal computers (PCs), computer peripherals, and storage devices. The industry has faced several logistical disruptions owing to the COVID-19 pandemic. However, the work-from-home culture and continuing global digitization have fostered overwhelming demand for computer hardware products. Several organizations' delays in office opening plans due to the spread of the COVOD-19 omicron variant should help the industry witness steady demand in the coming months.
According to an International Data Corporation report, global shipments of traditional PCs are on track to reach 344.70 million units in 2021, representing a 13.5% year-over-year rise. In addition, U.S. consumer confidence improved in December, suggesting that the overall economy will continue to expand in 2022. This bodes well for the computer hardware industry.
Given this backdrop, we think it could be wise to add quality computer hardware stocks Dell Technologies Inc. (DELL), Western Digital Corporation (WDC), and Seiko Epson Corporation (SEKEY) to one’s portfolio.
Dell Technologies Inc. (DELL)
DELL designs, develops, manufactures, markets, sells, and supports Information technology solutions, products, and services worldwide. The Round Rock, Tex., company’s segments include its Infrastructure Solutions Group (ISG) and Client Solutions Group (CSG).
On November 23, Chuck Whitten, the company’s co-chief operating officer, said, "We are uniquely positioned in the data era, with durable advantages and market-leading positions. Our strategy is focused on growing our core business and in adjacent multi-billion-dollar markets including multi-cloud, edge, telecom and as-a-Service."
DELL’s total net revenue increased 20.9% year-over-year to $28.39 billion for its fiscal third quarter, ended October 29, 2021. The company’s gross margin increased 11% year-over-year to $8.06 billion, while its net income came in at $3.89 billion, up 341.3% year-over-year. Also, its non-GAAP EPS was $2.37, up 16.7% year-over-year.
Analysts expect DELL’s revenue to be $105.20 billion in its fiscal 2022, representing an 11.5% year-over-year rise. The company’s EPS is expected to increase 3% year-over-year to $8.24 in fiscal 2022. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has gained 1.4% in price over the past month to close yesterday’s trading session at $56.95.
DELL’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our POWR Rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
Also, the stock has an A grade for Value. It is ranked #21 of 52 stocks in the Technology - Hardware industry. Click here to see the additional POWR Ratings for Growth, Momentum, Stability, Sentiment, and Quality for DELL.
Western Digital Corporation (WDC)
WDC in San Jose, Calif., develops, manufactures, and sells data storage devices and solutions in the United States, China, Hong Kong, Europe, the Middle East, Africa, and internationally. The company’s brand portfolio includes G-Technology, SanDisk, and WD brands.
On October 28, 2021, WDC’s CEO David Goeckeler said, “Strong demand across diverse end markets, particularly for our cloud products, combined with Western Digital’s strong innovation engine, broad routes to market and sharpened execution, enabled us to deliver solid results within our guidance range, even in the face of significant COVID impacts and supply chain disruptions.”
WDC’s net revenue was $5.05 billion for its fiscal first quarter, ended October 1, 2021, up 28.8% year-over-year. The company’s net income was $610 million, versus a $60 million loss in the prior-year quarter. Also, its EPS was $1.93, compared to a loss of $0.20 in the year-ago period.
Analysts expect WDC’s revenue to be $17.20 billion in fiscal 2022, representing a 17.9% year-over-year rise. In addition, the company’s EPS is expected to increase 95.9% year-over-year in the current year to $7.68. Over the past month, the stock has gained 8.8% in price to close yesterday’s trading session at $62.84.
It is no surprise that WDC has an overall B rating, which equates to a Buy in our proprietary rating system. In addition, it has an A grade for Growth and a B grade for Value.
WDC is ranked #19 in the Technology - Hardware industry. Click here to see the additional POWR Ratings for WDC (Momentum, Stability, Sentiment, and Quality).
Seiko Epson Corporation (SEKEY)
Headquartered in Suwa, Japan, SEKEY develops, manufactures, sells, and provides products and services in printing solutions, visual communications, wearable and industrial products, and other businesses. It operates through three segments: Printing Solutions, Visual Communications, and Wearable & Industrial Products.
SEKEY’s revenue increased 25.4% year-over-year to ¥550.60 billion ($4.79 billion) for the six months ended September 30, 2021. The company’s business profit increased 239.2% year-over-year to ¥49.73 billion ($432.69 million). And its profit for the period came in at ¥36.51 billion ($317.65 million), up 754.5% year-over-year. Over the past month, the stock gained 9.9% in price to close yesterday’s trading session at $8.97.
SEKEY has an overall A grade, which equates to a Strong Buy in our POWR Rating system. Also, it has an A grade for Value, Stability, and Quality. It is ranked #3 in the Technology - Hardware industry. Click here to see Growth, Momentum, and Sentiment ratings for SEKEY.
DELL shares were trading at $57.23 per share on Wednesday afternoon, up $0.28 (+0.49%). Year-to-date, DELL has gained 56.17%, versus a 29.25% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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