Like a commuter caught in an early evening traffic jam, Dell stock is stuck under $13.65 a share. Investors don't believe Carl Icahn's $14 bid is serious, even if the fight between Icahn and Michael Dell is all that and more.

"Can you imagine a real estate broker running advertisements warning of termite danger in a house each time a prospective buyer seems interested?" Icahn wrote in an open letter to shareholders.

He's referring to a late March filing in which Dell described its prospects as bleak enough to require a total overhaul of the business, an overhaul best executed as a private entity. Who's right?


Let's address that question in context. Here's a by-the-numbers look at how Dell stock compares to peers Apple and Hewlett-Packard :

Key Statistics
Dell
Apple
HP

Current share price

$13.48

$432.25

$25.44

Shares outstanding

1.76 billion

938.6 million

1.93 billion

Market cap

$23.7 billion

$405.5 billion

$49.1 billion

Trailing P/E ratio

12.74

10.31

Not available

PEG ratio

2.24

0.52

Not available

Gross margin

21.1%

39.5%

23.6%

Cash from operations

$3.38 billion

$55.26 billion

$13.02 billion

Sources: S&P Capital IQ and Yahoo! Finance.

And here's what Fools say, going by the data available in our CAPS investor intelligence database:

CAPS Category
Dell
Apple
HP

CAPS stars (out of 5)

**

****

**

No. of CAPS ratings

5,686

30,076

3810

Bullish CAPS ratings

3,982

27785

3406

Bearish CAPS ratings

1,704

2291

404

Bull ratio

70%

92.4%

89.4%

Source: Motley Fool CAPS.

Fools have expressed mixed views of the Dell's go-private plan for months. The last CAPS All-Star to weigh in abandoned the stock in April. "PC sales [fell off] much steeper than I expected," wrote Flygal5 in giving the stock a thumbs-down rating in CAPS. "I was wrong on this one, got to stop listening to Southeastern Asset Management."

Ouch! I'm not so sure Southeastern deserves such harsh criticism.

Verdict: Sell Dell stock now
And yet it's worth noting that Southeastern has sold half its stake in Dell to Icahn. Explaining the move in a statement to Businessweek, the firm said Icahn is  "in the best position" to lead the fight for a better offer. I suppose just saying "we have to move on" would have been too forward?

To be fair, those holding on are still due a dividend payment yielding 2.4% annualized. Dell also continues to partner with Oracle for serving data centers and other larger-size customers. There's plenty of life left in the business.

But can Icahn force a sale above $13.65 a share? I don't think so. Not with Southeastern moving to the sidelines. Do you agree? Let us know what you think of Icahn's chances, and whether you'd buy, sell, or short Dell stock at current prices, using the comments box below.

Five stocks enter, one stock leaves
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The article Here's How to Play Dell Stock Now originally appeared on Fool.com.

Fool contributor Tim Beyers is a member of the  Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Apple at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and Oracle. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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SELL DELL NOW? IS THIS THE ADVICE YOU GIVE TO M. DELL? HE SAYS THE COMPANY IS IN TROUBLE BUT HE IS WILLING TO TAKE IT PRIVATE FOR 24 BILLION PAYING A LARE PREMIUM TO TAKE IT PRIVATE. SOMEHOW I DO NOT BELIEVE THE EARNINGS REPORTS AND THINK THE BOOKS MAY HAVE BEEN COOKED. MY ADVICE IS HOLD.

June 22 2013 at 5:13 AM Report abuse rate up rate down Reply