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Why Is HP Enterprise (HPE) Up 13.5% Since Last Earnings Report?
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It has been about a month since the last earnings report for Hewlett Packard Enterprise (HPE - Free Report) . Shares have added about 13.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is HP Enterprise due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Hewlett Packard Q2 Earnings Beat, Sales Miss Estimates
Hewlett Packard Enterprise reported second-quarter fiscal 2023 non-GAAP earnings of 52 cents per share, which came ahead of the Zacks Consensus Estimate of 47 cents. The reported figure was 18% higher than the year-ago quarter’s earnings of 44 cents per share.
Revenues of $7 billion increased 4% from the prior-year quarter but fell short of the consensus mark of $7.28 billion. The annualized revenue run rate was up 35% year over year to $1.1 billion.
Hewlett Packard continued to witness the increased demand for its products and services during the quarter. Moreover, an improvement in the supply chain helped the company deliver customer orders, which boosted the overall quarterly performance. Despite high inflationary pressure, macroeconomic headwinds and geopolitical issues, the company witnessed an increase in earnings and sales.
Segment Performance
Segment-wise, High-Performance Compute & Artificial Intelligence revenues increased 18% year over year to $840 million. The segment’s operating margin came in at (0.2)% compared with (5.6)% reported in the year-ago quarter.
The Compute division’s sales declined 8% year over year to $2.8 billion. The division witnessed 110 basis points (bps) operating profit margin expansion to 15.2%.
Revenues in the Intelligent Edge division rose 50% year over year to $1.3 billion during the quarter, primarily driven by strong customer demand. The operating margin of the segment improved 1430 bps to 26.9%.
Financial Service revenues increased 4% to $858 million. The segment’s operating margin decreased 280 bps to 9.8%. Net portfolio assets increased 5% to roughly $13.3 billion.
Revenues from the Storage business were down 3% year over year to $1 billion. Meanwhile, the operating margin declined 390 bps to 7.9%.
Corporate Investments & Other revenues were $296 million, down 9.5% year over year.
Operating Results
The non-GAAP gross profit increased 10.1% to $2.53 billion. Meanwhile, the non-GAAP margin improved 200 bps to 36.2%.
Hewlett Packard’s non-GAAP operating profit increased 27.4% to $799 million, while the non-GAAP operating margin improved 220 bps year over year to 11.5%. The company continued to save from the cost optimization plan and invest in high-growth and margin-rich portfolios in the second quarter of fiscal 2023.
Balance Sheet and Cash Flow
Hewlett Packard ended the fiscal second quarter with $2.78 billion in cash and cash equivalents compared with $2.53 billion at the end of the previous quarter.
In the fiscal second quarter, Hewlett Packard generated $889 million in cash for operational activities and $288 million in free cash flow.
Hewlett Packard returned $261 million to shareholders through repurchasing $106 million worth of its common stock and $155 million in dividend payments in the reported quarter. HPE announced that its board approved a quarterly cash dividend of 12 cents per share payable on Jul 14, 2023, to the shareholders recorded as of Jun 15, 2023.
Guidance
Hewlett Packard initiated guidance for the third quarter and raised the outlook for fiscal 2023. The company forecasts to generate revenues between $6.7 billion and $7.2 billion in the third quarter. For the fiscal third quarter, the company estimates GAAP and non-GAAP earnings per share in the range of 34-38 cents and 44-48 cents, respectively.
For fiscal 2023, the company projects GAAP and non-GAAP earnings per share in the range of $1.42-$1.50 and $2.06-$2.14, respectively, from the previous guidance of $1.40-$1.48 and $2.02-$2.10. Moreover, the company now estimates revenues to grow in the range of 4-6% adjusted for currency. HPE continues to anticipate free cash flow in the band of $1.9-$2.1 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 6.16% due to these changes.
VGM Scores
Currently, HP Enterprise has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, HP Enterprise has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is HP Enterprise (HPE) Up 13.5% Since Last Earnings Report?
It has been about a month since the last earnings report for Hewlett Packard Enterprise (HPE - Free Report) . Shares have added about 13.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is HP Enterprise due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Hewlett Packard Q2 Earnings Beat, Sales Miss Estimates
Hewlett Packard Enterprise reported second-quarter fiscal 2023 non-GAAP earnings of 52 cents per share, which came ahead of the Zacks Consensus Estimate of 47 cents. The reported figure was 18% higher than the year-ago quarter’s earnings of 44 cents per share.
Revenues of $7 billion increased 4% from the prior-year quarter but fell short of the consensus mark of $7.28 billion. The annualized revenue run rate was up 35% year over year to $1.1 billion.
Hewlett Packard continued to witness the increased demand for its products and services during the quarter. Moreover, an improvement in the supply chain helped the company deliver customer orders, which boosted the overall quarterly performance. Despite high inflationary pressure, macroeconomic headwinds and geopolitical issues, the company witnessed an increase in earnings and sales.
Segment Performance
Segment-wise, High-Performance Compute & Artificial Intelligence revenues increased 18% year over year to $840 million. The segment’s operating margin came in at (0.2)% compared with (5.6)% reported in the year-ago quarter.
The Compute division’s sales declined 8% year over year to $2.8 billion. The division witnessed 110 basis points (bps) operating profit margin expansion to 15.2%.
Revenues in the Intelligent Edge division rose 50% year over year to $1.3 billion during the quarter, primarily driven by strong customer demand. The operating margin of the segment improved 1430 bps to 26.9%.
Financial Service revenues increased 4% to $858 million. The segment’s operating margin decreased 280 bps to 9.8%. Net portfolio assets increased 5% to roughly $13.3 billion.
Revenues from the Storage business were down 3% year over year to $1 billion. Meanwhile, the operating margin declined 390 bps to 7.9%.
Corporate Investments & Other revenues were $296 million, down 9.5% year over year.
Operating Results
The non-GAAP gross profit increased 10.1% to $2.53 billion. Meanwhile, the non-GAAP margin improved 200 bps to 36.2%.
Hewlett Packard’s non-GAAP operating profit increased 27.4% to $799 million, while the non-GAAP operating margin improved 220 bps year over year to 11.5%. The company continued to save from the cost optimization plan and invest in high-growth and margin-rich portfolios in the second quarter of fiscal 2023.
Balance Sheet and Cash Flow
Hewlett Packard ended the fiscal second quarter with $2.78 billion in cash and cash equivalents compared with $2.53 billion at the end of the previous quarter.
In the fiscal second quarter, Hewlett Packard generated $889 million in cash for operational activities and $288 million in free cash flow.
Hewlett Packard returned $261 million to shareholders through repurchasing $106 million worth of its common stock and $155 million in dividend payments in the reported quarter. HPE announced that its board approved a quarterly cash dividend of 12 cents per share payable on Jul 14, 2023, to the shareholders recorded as of Jun 15, 2023.
Guidance
Hewlett Packard initiated guidance for the third quarter and raised the outlook for fiscal 2023. The company forecasts to generate revenues between $6.7 billion and $7.2 billion in the third quarter. For the fiscal third quarter, the company estimates GAAP and non-GAAP earnings per share in the range of 34-38 cents and 44-48 cents, respectively.
For fiscal 2023, the company projects GAAP and non-GAAP earnings per share in the range of $1.42-$1.50 and $2.06-$2.14, respectively, from the previous guidance of $1.40-$1.48 and $2.02-$2.10. Moreover, the company now estimates revenues to grow in the range of 4-6% adjusted for currency. HPE continues to anticipate free cash flow in the band of $1.9-$2.1 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 6.16% due to these changes.
VGM Scores
Currently, HP Enterprise has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, HP Enterprise has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.