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What's in the Offing for Hewlett Packard (HPE) Q4 Earnings?

Zacks Equity Research

Hewlett Packard Enterprise Company HPE is scheduled to report fourth-quarter fiscal 2019 results on Nov 25.

For the to-be-reported quarter, Hewlett Packard projects non-GAAP earnings per share in the range of 43-47 cents. The Zacks Consensus Estimate is currently pegged at 46 cents.

The consensus mark for revenues currently stands at $7.54 billion, indicating a decrease of 5.1% 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 being 15.16%.

In the last reported quarter, the company delivered non-GAAP earnings of 45 cents per share, which beat the Zacks Consensus Estimate of 40 cents as well as the year-ago quarter’s 42 cents.

However, net revenues of $7.22 billion declined 7% on a year-over-year basis and also missed the Zacks Consensus Estimate of $7.29 billion. Further, in constant currency (cc), revenues slid 3% year over year.

Let’s see, how things are shaping 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-eps-surprise | Hewlett Packard Enterprise Company Quote

Key Factors to Drive Q4 Results

Hewlett Packard’s results for the fiscal fourth quarter are likely to reflect growth in Value Compute portfolio. The company’s investments in high-performance compute, hyper-converged infrastructure, hybrid cloud and HPE GreenLake orders are likely to have been constant key drivers.

Rise in Nimble Storage is likely to have been an upside. The launch of HPE Primera, a storage platform for mission critical workloads, during the last reported quarter might have been a positive.

Higher adoption of the company’s various new offerings for the mid-market and SMB market are expected to have aided Intelligent Edge segment. Robust growth of Aruba services across all geographies is a tailwind.

Moreover, the company’s strategic partnership with H3C also makes us optimistic this earnings season.

Additionally, the company’s focus on shifting its portfolio to higher margin products and services is likely to have boosted its margins.

However, uneven demand due to the ongoing Sino-US trade tensions is a major downside. Decline in tier-1 server shipments might have been an overhang too.  Also, longer sales cycle for large enterprise deals is expected to have posed a threat to the stock. Foreign exchange headwinds are an added concern.

What Our Model Says

The proven Zacks model predicts an earnings beat for Hewlett Packard this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Hewlett Packard has a Zacks Rank #2 and an Earnings ESP of +8.70%.

Other Stocks to Consider

Following are some other stocks worth considering with the right mix of elements to also beat on earnings this reporting cycle:

Golar LNG Limited GLNG has an Earnings ESP of +16.52% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Burlington Stores, Inc. BURL has an Earnings ESP of +0.44% and a Zacks Rank of 2.

Momo Inc. MOMO has an Earnings ESP of +3.94% and is Zacks #3 Ranked.

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