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Hewlett Packard (HPE) to Post Q2 Earnings: What's in Store?

Zacks Equity Research
·4-min read

Hewlett Packard Enterprise Company HPE is slated to report second-quarter fiscal 2020 results on May 21.

During the fiscal first-quarter earnings conference call, Hewlett Packard had stated that it is difficult to quantify the real impact of the coronavirus-induced demand-and-supply disruptions. Therefore, management didn’t issue any earnings guidance for the fiscal second quarter.

The Zacks Consensus Estimate for fiscal second-quarter earnings is currently pegged at 32 cents, reflecting a year-over-year decline of 23.8%.

The consensus mark for quarterly revenues is currently pinned at $6.48 billion, calling for a 9.4% decrease from the year-ago reported figure.

Notably, the company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 9.5%.

In the last reported quarter, Hewlett Packard delivered non-GAAP earnings of 44 cents per share, which beat the Zacks Consensus Estimate by a penny as well as came in higher than the year-ago quarter’s 42 cents.

However, net revenues of $6.95 billion declined 8% on a year-over-year basis, missing the Zacks Consensus Estimate of $7.2 billion. Further, in constant currency (cc), revenues slid 7% year over year.

Let’s see, how things might have shaped up prior to the upcoming announcement.

Hewlett Packard Enterprise Company Price and EPS Surprise

Hewlett Packard Enterprise Company Price and EPS Surprise
Hewlett Packard Enterprise Company Price and EPS Surprise

Hewlett Packard Enterprise Company price-eps-surprise | Hewlett Packard Enterprise Company Quote

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Factors at Play

Supply-chain disruptions caused by the coronavirus outbreak in China are expected to have adversely impacted Hewlett Packard’s fiscal second-quarter performance. Notably, China is a key market for the company, and the aforementioned factors might have significantly dampened Hewlett Packard’s server sales in the country.

Furthermore, organizations are pushing back their big and expensive technology products due to a slowdown in global economic growth, which is a major downside for the fiscal second quarter. Decline in tier-1 server shipments might have been an overhang too. Foreign-exchange headwinds are expected to have been an added concern.

Additionally, more and more organizations continue to shift to cloud computing owing to their maintenance-free and cost-effective structure compared with standalone servers.

What Our Model Says

Our proven model does not predict an earnings beat for Hewlett Packard this season.The combination of a positive Earnings ESP, and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Hewlett Packard currently carries a Zacks Rank of 4 and has an Earnings ESP of 0.00%.

Some Stocks With Favorable Combinations

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:

Anaplan, Inc. PLAN has an Earnings ESP of +3.70% and currently sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

CrowdStrike Holdings Inc. CRWD has an Earnings ESP of +3.57% and holds a Zacks Rank of 2 currently.

Baidu Inc. BIDU has an Earnings ESP of +4.45% and carries a Zacks Rank #3, at present.

Zacks Top 10 Stocks for 2020

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Baidu, Inc. (BIDU) : Free Stock Analysis Report
 
Hewlett Packard Enterprise Company (HPE) : Free Stock Analysis Report
 
Anaplan, Inc. (PLAN) : Free Stock Analysis Report
 
CrowdStrike Holdings Inc. (CRWD) : Free Stock Analysis Report
 
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