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Hewlett Packard Enterprise Company (HPE - Free Report) delivered third-quarter fiscal 2020 non-GAAP earnings of 32 cents per share, which surpassed the Zacks Consensus Estimate of 25 cents. However, the reported figure comes in lower than the year-ago number of 45 cents.
Revenues of $6.8 billion were down 6% from the prior-year quarter and 4% in constant currency. However, the top line grew 13% sequentially mainly driven by solid execution in clearing a backlog of approximately $500 million. The reported figure beat the Zacks Consensus Estimate of $6.14 billion.
Quarterly Details
Segment wise, the company registered sequential sales growth across most of its business segments. The Compute division’s sales increased 28% quarter on quarter to $3.4 billion, thanks to better execution against the backlog and an improved supply chain.
Revenues from the Storage business were up 4% sequentially to $1.1 billion on improved operations, execution and reduction in backlog. HPC & MCS revenues grew 10% quarter on quarter to $649 million, primarily on improved installations and customer acceptance of the systems. Revenues in the Intelligent Edge division rose 3% sequentially to $684 million during the quarter.
Hewlett Packard Enterprise Company Price, Consensus and EPS Surprise
The company registered revenue declines across its A&PS and Financial Service businesses. A&PS sales declined 5% quarter on quarter to $226 million as the COVID-19 pandemic impacted consulting activities of the division’s team members. Financial Service revenues were down 3% sequentially to $811 million.
Operating Results
Non-GAAP gross margin of 30.4% contracted 360 basis points (bps) on a year-over-year basis and 160 bps sequentially.
HPE’s non-GAAP operating profit climbed 33% quarter on quarter to $484 million. Non-GAAP operating margin of 7.1% improved 100 bps sequentially but shrunk 280 bps from the year-ago quarter level.
Balance Sheet and Cash Flow
The company ended the fiscal third quarter with $8.47 billion in cash and cash equivalents compared with the $5.13 billion recorded at the end of the second quarter.
During the reported period, Hewlett Packard Enterprise generated operating and free cash flows of $1.5 billion and $924 million. During the first nine months of fiscal 2020, it generated operating and free cash flows of $1.49 billion and $337 million.
Moreover, management provided an update on its cost-optimization plan which will be implemented through fiscal 2022, including changes to the company’s workforce, real estate model and business process improvements. Hewlett Packard expects at least $800 million in annualized savings by the end of fiscal 2022.
Zacks Rank and Other Key Picks
Currently, Hewlett Packard carries a Zacks Rank of 2 (Buy).
The long-term earnings growth rate for Apple, Lam Research and Synaptics is currently pegged at 10.7%, 15.4%, and 10%, respectively.
Zacks’ Single Best Pick to Double
From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, SherazMian hand-picks one to have the most explosive upside of all.
With users in 180 countries and soaring revenues, it’s set to thrive on remote working long after the pandemic ends. No wonder it recently offered a stunning $600 million stock buy-back plan.
The sky’s the limit for this emerging tech giant. And the earlier you get in, the greater your potential gain.
Image: Bigstock
Hewlett Packard (HPE) Q3 Earnings & Revenues Beat Estimates
Hewlett Packard Enterprise Company (HPE - Free Report) delivered third-quarter fiscal 2020 non-GAAP earnings of 32 cents per share, which surpassed the Zacks Consensus Estimate of 25 cents. However, the reported figure comes in lower than the year-ago number of 45 cents.
Revenues of $6.8 billion were down 6% from the prior-year quarter and 4% in constant currency. However, the top line grew 13% sequentially mainly driven by solid execution in clearing a backlog of approximately $500 million. The reported figure beat the Zacks Consensus Estimate of $6.14 billion.
Quarterly Details
Segment wise, the company registered sequential sales growth across most of its business segments. The Compute division’s sales increased 28% quarter on quarter to $3.4 billion, thanks to better execution against the backlog and an improved supply chain.
Revenues from the Storage business were up 4% sequentially to $1.1 billion on improved operations, execution and reduction in backlog. HPC & MCS revenues grew 10% quarter on quarter to $649 million, primarily on improved installations and customer acceptance of the systems. Revenues in the Intelligent Edge division rose 3% sequentially to $684 million during the quarter.
Hewlett Packard Enterprise Company Price, Consensus and EPS Surprise
Hewlett Packard Enterprise Company price-consensus-eps-surprise-chart | Hewlett Packard Enterprise Company Quote
The company registered revenue declines across its A&PS and Financial Service businesses. A&PS sales declined 5% quarter on quarter to $226 million as the COVID-19 pandemic impacted consulting activities of the division’s team members. Financial Service revenues were down 3% sequentially to $811 million.
Operating Results
Non-GAAP gross margin of 30.4% contracted 360 basis points (bps) on a year-over-year basis and 160 bps sequentially.
HPE’s non-GAAP operating profit climbed 33% quarter on quarter to $484 million. Non-GAAP operating margin of 7.1% improved 100 bps sequentially but shrunk 280 bps from the year-ago quarter level.
Balance Sheet and Cash Flow
The company ended the fiscal third quarter with $8.47 billion in cash and cash equivalents compared with the $5.13 billion recorded at the end of the second quarter.
During the reported period, Hewlett Packard Enterprise generated operating and free cash flows of $1.5 billion and $924 million. During the first nine months of fiscal 2020, it generated operating and free cash flows of $1.49 billion and $337 million.
Moreover, management provided an update on its cost-optimization plan which will be implemented through fiscal 2022, including changes to the company’s workforce, real estate model and business process improvements. Hewlett Packard expects at least $800 million in annualized savings by the end of fiscal 2022.
Zacks Rank and Other Key Picks
Currently, Hewlett Packard carries a Zacks Rank of 2 (Buy).
Other top-ranked stocks in the broader technology sector include Apple (AAPL - Free Report) , Lam Research Corporation (LRCX - Free Report) and Synaptics (SYNA - Free Report) , all sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term earnings growth rate for Apple, Lam Research and Synaptics is currently pegged at 10.7%, 15.4%, and 10%, respectively.
Zacks’ Single Best Pick to Double
From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, SherazMian hand-picks one to have the most explosive upside of all.
With users in 180 countries and soaring revenues, it’s set to thrive on remote working long after the pandemic ends. No wonder it recently offered a stunning $600 million stock buy-back plan.
The sky’s the limit for this emerging tech giant. And the earlier you get in, the greater your potential gain.
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