Back to top

Analyst Blog

Zacks Equity Research

Can Hewlett-Packard (HPQ) Keep the Earnings Streak Alive?


 ZacksTrade Now

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at or call 800-767-3771 ext.  9339.

We expect Hewlett-Packard Company (HPQ - Analyst Report) or H-P to beat expectations when it reports first-quarter 2014 results on Feb 20.

Why a Likely Positive Surprise?

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

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate (86 cents per share) and the Zacks Consensus Estimate (85 cents per share), stands at +1.18%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.

Zacks Rank: H-P currently carries a Zacks Rank #2 (Buy). Note that stocks with Zacks Ranks of #1, 2 and 3 have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement. 

The combination of H-P’s Zacks Rank #2 and +1.18% ESP makes us very confident in looking for a positive earnings beat.

What is Driving the Better-Than-Expected Earnings?

H-P’s traction in the cloud, security and big data segments are the positives, going forward. Restructuring initiatives and management changes are also expected to keep the company on the growth path.

H-P’s shift to core software business will also help it to achieve long-term profitability. The company’s focus on 3D printing segment could also be a catalyst, going forward. Additionally, the moderation of PC sales declines should act as a positive factor for the company. Moreover, it is noteworthy that H-P has surpassed the Zacks Consensus Estimate in the last three out of the four quarters with an average positive surprise of 5.69%.

However, continuing macroeconomic challenges, tepid IT spending and competition from Lenovo, International Business Machines (IBM - Analyst Report) and Oracle (ORCL - Analyst Report) are the headwinds, going forward.

Other Stocks to Consider

Orbotech Ltd. (ORBK - Snapshot Report), with an Earnings ESP of +12.9% and a Zacks Rank #1 (Strong Buy) is another company you may want to consider.

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

Learn more

Start for as little as $4.50 per trade.

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
LAKE SHORE G LSG 0.77 +6.05%
SKECHERS USA SKX 38.53 +4.50%
QUESTCOR PHA QCOR 80.07 +2.47%
VIPSHOP HOLD VIPS 156.35 +1.82%
ENLINK MIDS ENLC 36.29 +1.60%