Back to top

Analyst Blog

Hewlett-Packard Corp. (HPQ - Analyst Report) is set to report third-quarter 2013 results on August 21. Last quarter, it posted a 7.41% positive earnings surprise. Let’s see how things are shaping up for this announcement.

Why a Likely Positive Surprise?

Our proven model shows that HP is likely to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP:  The Company projects an Earnings Surprise Projection or ESP (Zacks Earnings ESP: A Better Method) of 2.30% for third quarter. That is because the Most Accurate estimate stands at 89 cents while the Zacks Consensus Estimate is lower at 87 cents.

Zacks Rank #2 (Buy): HPQ has a Zacks Rank #2 (Buy). HPQ's Zacks Rank #2, when combined with an ESP of 2.30%, makes a strong case for an earnings beat.

The combination of HP’s Zacks Rank #2 (Buy) and 2.30% ESP makes us very confident in looking for a positive earnings beat on August 21.

What is Driving the Better-Than-Expected Earnings?

Some analysts believe that HP is witnessing an upside in the by upside in PCs (market share gains) and also witnessing some stability in printing and services. So, they expect EPS to improve in the upcoming quarter.

The positive trend is seen in the trailing four-quarter average surprise of 6.42%, which was greatly helped by the 7.41% surprise in the last-reported quarter. This was possible because HP did a good job of controlling expenses and thereby expanding margins especially in printing.

Other Stocks to Consider

Here are some other companies you may want to consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:  

  • Computer Sciences Corp. (CSC - Analyst Report), Earnings ESP of 1.18% and Zacks Rank #2 (Buy)
  • R. R. Donelley. , Earnings ESP of 2.50%and Zacks Rank #1 (Strong Buy)
  • Portfolio Recovery Inc. (PRAA - Analyst Report), Earnings ESP of 2.33% and Zacks Rank #2 (Buy)

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
UNITED THER… UTHR 117.83 +28.51%
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
BANCO DO BR… BDORY 15.53 +3.95%