Hewlett Packard (HPE) to Report Q3 Earnings: What's in Store?
Hewlett Packard Enterprise HPE is slated to report third-quarter fiscal 2023 results after market close on Aug 29.
For the third quarter, Hewlett Packard projects non-GAAP earnings between 44 cents and 48 cents per share. The Zacks Consensus Estimate for earnings is pegged at 46 cents, indicating a year-over-year decrease of 4.2%.
HPE expects third-quarter revenues between $6.7 billion and $7.2 billion. The consensus mark for quarterly revenues is pegged at $6.98 billion, suggesting an increase of 0.4% from the year-ago period.
The company’s earnings surpassed the Zacks Consensus Estimate twice in the trailing four quarters while matching the same on two occasions, the average beat being 8%.
Let’s see how things have shaped up before the announcement.
Hewlett Packard Enterprise Company Price and EPS Surprise
Hewlett Packard Enterprise Company price-eps-surprise | Hewlett Packard Enterprise Company Quote
Factors to Note
HPE’s fiscal third-quarter performance is likely to have benefited from strong momentum in the as-a-service platform and significant contributions from growth businesses, such as high-performance computing & modular cooling systems and Intelligent Edge. At the end of the second quarter of fiscal 2023, the total as-a-service order value crossed the $10 billion mark, while the company shifted its business to a high-margin software-intensive as-a-service offering.
Our estimate for the company’s High-Performance Computing & Artificial Intelligence and Intelligent Edge segment third-quarter revenues is pegged at $851.6 million and $1.32 billion, respectively.
Accelerated digital transformation and the higher demand for cloud networking due to the continuous hybrid working trend are likely to have contributed to the third-quarter top line. The solid adoption of the Aruba Edge Services Platform, which provides edge-to-cloud connectivity as a service, and its cloud services arm, HPE GreenLake, might have driven the to-be-reported quarter’s revenues.
Our estimate for HPE’s Compute and Storage segment third-quarter revenues is pegged at $2.70 billion and $1.07 billion, respectively.
Hewlett Packard’s gross margin is likely to have improved during the quarter, driven by a strong pricing discipline that is likely to have mitigated logistic costs, the benefits of an improving supply-chain base, a positive mix shift to high-margin software-rich businesses, cost takeouts and automation.
However, HPE expects to continue facing higher commodity costs and foreign-exchange headwinds for the next few quarters. These factors are likely to have negatively impacted its sales growth and profitability in the quarter under review.
What Our Model Says
Our proven model does not conclusively predict an earnings beat for Hewlett Packard this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here.
Though HPE currently carries a Zacks Rank of 2, it has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks With the Favorable Combination
Per our model, Patterson Companies PDCO, Dave & Buster’s Entertainment PLAY and Science Applications International SAIC have the right combination of elements to post an earnings beat in their upcoming releases.
Patterson Companies carries a Zacks Rank #2 and has an Earnings ESP of +5.66%. The company is anticipated to report first-quarter fiscal 2024 results on Sep 7. Its earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missing the same on one occasion, with the average surprise being 4.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Patterson Companies’ first-quarter earnings stands at 40 cents per share, 25% higher than the year-ago quarter. It is estimated to report revenues of $1.57 billion, which suggests an increase of approximately 3.2% from the year-ago quarter.
Dave & Buster’s carries a Zacks Rank #3 and has an Earnings ESP of +4.57%. The company is anticipated to report second-quarter fiscal 2024 results on Sep 6. Its earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missing the same on one occasion, with the average surprise being 6.8%.
The Zacks Consensus Estimate for PLAY’s second-quarter earnings is pegged at 94 cents per share, indicating a year-over-year increase of 54.1%. The consensus mark for revenues stands at $557.9 million, suggesting a year-over-year increase of 19.1%.
Science Applications is anticipated to report second-quarter fiscal 2024 results on Sep 7. The company has a Zacks Rank #3 and an Earnings ESP of +5.00% at present. Science Applications’ earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 14.5%.
The Zacks Consensus Estimate for SAIC’s second-quarter earnings is pegged at $1.60 per share, suggesting a decline of 8.6% from the year-ago quarter’s earnings of $1.75. Science Applications’ quarterly revenues are estimated to decrease 7.6% year over year to $1.69 billion.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Patterson Companies, Inc. (PDCO) : Free Stock Analysis Report
Science Applications International Corporation (SAIC) : Free Stock Analysis Report
Dave & Buster's Entertainment, Inc. (PLAY) : Free Stock Analysis Report
Hewlett Packard Enterprise Company (HPE) : Free Stock Analysis Report
