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Hewlett Packard's (HPE) FY23 Earnings Guidance Lags Estimates

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Hewlett Packard Enterprise Company (HPE - Free Report) shares fell more than 2% during Wednesday’s extended trading session after the company provided lower-than-expected earnings guidance for fiscal 2023, despite projecting health growth in its newer services. HPE expects fiscal 2023 earnings in the range of $1.96-$2.04 per share, which fell short of the Zacks Consensus Estimate of $2.12.

Meanwhile, Hewlett Packard reiterated its fiscal 2022 outlook. It continues to project year-over-year growth of 3-4% in fiscal 2022 adjusted revenues. It forecast GAAP and non-GAAP earnings per share in the range of $1.20-$1.28 and $1.96-$2.04, respectively.

The Zacks Consensus Estimate for fiscal 2022 revenues suggests a year-over-year increase of approximately 1%, while the consensus mark for non-GAAP earnings is pegged at $2.01 per share. The company reaffirmed its free cash flow guidance in the band of $1.7-$1.9 billion for fiscal 2022.

Hewlett Packard expects its fiscal 2023 results to reflect continued momentum from fiscal 2022. The company projects its fiscal 2023 adjusted revenues to increase in the 2-4% range year over year on top of the fiscal 2022 growth guidance range of 3-4%.

The Zacks Consensus Estimate for fiscal 2023 revenues is pegged at $28.64 billion, indicating year-over-year growth of 2%. Additionally, HPE projects to generate free cash flow in the range of $1.9-$2.1 billion during the fiscal.

GreenLake to Drive Growth in the Long Run

Hewlett Packard initiated its long-term financial model from fiscal 2022 through fiscal 2025. The company forecasts adjusted revenues to grow between 2% and 4% through fiscal 2022 to 2025, primarily driven by healthy growth in Aruba and High-Performance Computing.

HPE stated that its GreenLake services will drive robust growth during the fiscal 2022-2025 period. The company is benefiting from a strong demand environment for its edge-to-cloud platform, GreenLake, as customers are undergoing a major digital transformation.

HPE GreenLake offers customers better visibility into resource utilization across co-located and public cloud-based workloads. The services ensure the administration of applications and data. Moreover, the GreenLake service suite provides customers with an agile, flexible, pay-per-use cloud experience, thereby eliminating the need for any major upfront capital investment.

Additionally, the company expects to generate total free cash flow of more than $6.5 billion through the fiscal 2022-2025 period.

Zacks Rank & Key Picks

Hewlett Packard currently carries a Zacks Rank #3 (Hold). Shares of HPE have plunged 18.7% year to date (YTD).

Some better-ranked stocks from the broader Computer and Technology sector are Zscaler (ZS - Free Report) , Digi International (DGII - Free Report) and Baidu (BIDU - Free Report) . Zscaler and Digi each sport a Zacks Rank #1 (Strong Buy) at present, while Baidu carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Zscaler's first-quarter fiscal 2023 earnings has been revised 7 cents north to 26 cents per share over the past 60 days. For fiscal 2023, earnings estimates have moved a penny north to $1.18 per share in the past 30 days.

ZS’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 28.6%. Shares of the company have declined 53.7% YTD.

The Zacks Consensus Estimate for Digi’s first-quarter fiscal 2023 earnings has increased by 4 cents to 42 cents per share over the past 90 days. For fiscal 2023, earnings estimates have moved 6.2% up to $1.88 per share in the past 60 days.

DGII's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 28.6%. Shares of the company have increased 48.4% YTD.

The Zacks Consensus Estimate for Baidu's fourth-quarter 2022 earnings has been revised 22 cents southward to $2.75 per share over the past 60 days. For 2022, earnings estimates have moved 16.2% north to $9.16 per share in the past 60 days.

Baidu's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 58.1%. Shares of BIDU have slumped 37.3% YTD.

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