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These 2 Stocks Made Investors Happy After Hours Monday


The stock market moved lower on Monday as investors came into the Thanksgiving-shortened trading week with new concerns about the outlook for the holiday season and how poor macroeconomic conditions could hurt consumer demand. The Nasdaq Composite (NASDAQINDEX: ^IXIC) took the biggest decline, while the Dow Jones Industrial Average (DJINDICES: ^DJI) and S&P 500 (SNPINDEX: ^GSPC) held up relatively better.


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Data source: Yahoo! Finance.

After the closing bell, several companies reported their quarterly financial results. Both Dell Technologies (NYSE: DELL) and Urban Outfitters (NASDAQ: URBN) had solid numbers that gave investors greater confidence in their prospects, which helped send their share prices higher in after-hours trading. Here’s what Dell and Urban Outfitters had to say and what investors took away from the reports.

Dell sees solid profit growth

Shares of Dell Technologies were up almost 2% as of 5 p.m. ET after having been up closer to 5% earlier in the after-hours trading period. The maker of computer equipment surpassed analysts’ expectations in its fiscal third quarter, which ended Oct. 28.

Dell’s numbers were mixed. Revenue actually eased lower by 6% to $24.7 billion, reflecting the slowdown from high pandemic-driven levels of demand in the year-earlier period. However, Dell did a good job of bolstering its profitability. Adjusted net income jumped 30% to $1.71 billion, and its adjusted earnings rose by nearly 40% year over year to $2.30 per share.

A closer look at the Q3 results, however, reveals that there are two very different stories in progress within the different divisions of the business. Revenue from Dell’s infrastructure solutions group hit a record of $9.6 billion, up 12% year over year. Dell also posted double-digit percentage gains in both its storage division and in the servers and networking segment. Operating income for the group soared 54% from year-ago levels.

Meanwhile, the client solutions group was weak, with revenue falling 17% on a 29% drop in consumer sales. Its operating income dropped 7%.

Dell investors weren’t surprised to see the PC-driven client solutions business struggle, and they were pleased to see the company respond by catering more to the needs of enterprise customers. That could be the key to its long-term success, and with the stock down about 30% so far this year, Dell management will need to stay focused on its strategic vision in order to mount a longer-term recovery.

Urban Outfitters posts fitting results

Meanwhile, shares of Urban Outfitters gained more than 2% after hours. Despite some challenges, the retailer held up well in a tough environment during its fiscal third quarter, which ended Oct. 31.

Urban Outfitters grew its revenue modestly, with net sales climbing almost 4% year over year to $1.18 billion. Comparable retail sales were up 4%, with the Anthropologie store concept seeing the biggest gains at 13%. Free People also showed a solid gain of 8%, but at its namesake Urban Outfitters stores, comparable sales fell 9%. A decline in wholesale segment revenue also weighed on overall top-line performance.

Conditions were tougher for Urban Outfitters’ profitability. Its gross margin fell more than 4 percentage points to 30.4%, and net income plunged by 58% year over year to $37.2 million, or $0.40 per share.

Like many retailers, Urban Outfitters saw its inventory levels rise during the quarter. That could be problematic as the holiday season begins, as it could force Urban Outfitters to boost its promotional activity, which would put even more pressure on its margins as it heads toward the end of its fiscal year.

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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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