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Is a Beat in the Cards for Hewlett Packard Enterprise in Q4 Earnings?

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Hewlett Packard Enterprise (HPE - Free Report) is scheduled to report fourth-quarter fiscal 2024 results on Dec. 5.

For the fourth quarter of fiscal 2024, management expects non-GAAP earnings per share between 52 and 57 cents. The consensus mark is pegged at 55 cents per share, indicating an increase of 5.8% from the prior-year quarter’s reported figure. The estimate has been unchanged over the past 60 days.

HPE’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an earnings surprise of 7.48%, on average.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

For the fourth quarter of fiscal 2024, HPE expects revenues between $8.1 billion and $8.4 billion. The Zacks Consensus Estimate is pegged at $8.23 billion, suggesting growth of approximately 12% from the year-ago quarter’s reported figure.

Factors to Consider

Hewlett Packard Enterprise’s fiscal fourth-quarter results are expected to have benefited from the recovery of the demand environment driven by artificial intelligence (AI). HPE’s AI-based networking portfolio is likely to have driven its Intelligent Edge services in both campus and branch segments.

For HPE, artificial intelligence has proven to be an elixir. In the fiscal fourth quarter, HPE’s AI systems and sovereign AI cloud offerings are likely to have been driven by strong demand by the customers. HPE’s top line is likely to have been driven by demand in HPE Private Cloud AI.

The demand for Hewlett Packard Enterprise’s AI Server is anticipated to have remained strong during the fiscal fourth quarter. Moreover, strength in HPE’s as-a-service platform and contributions from high-performance computing & modular cooling systems are likely to have added to its growth. Large scale AI customers are likely to have driven demand for HPE’s direct liquid cooling solutions.

The increasing adoption of the Aruba Edge Services Platform and HPE GreenLake are expected to have driven Hewlett Packard Enterprise’s revenues in the to-be-reported quarter. The HPE GreenLake solution is likely to have benefited from the company’s effort to simplify its cloud strategy by including all related products in the hybrid cloud segment. This initiative is expected to have simplified the customer adoption of the solution and added to the top line.

Hewlett Packard Enterprise has been benefiting from persistent growth in sales of its accelerator processing unit, primarily driven by rising demand of HPE Cray EX, Cray XT and HPE ProLiant Gen11 AI-optimized servers.

Hewlett Packard Enterprise’s gross margin is likely to have improved during the quarter, driven by a strong pricing discipline, the benefits of an improving supply chain, a positive mix shift to high-margin software-rich businesses, cost takeouts and automation.

Earnings Whispers

Our proven model predicts an earnings beat for HPE this earnings season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate (56 cents per share) and the Zacks Consensus Estimate (55 cents per share), is +1.51%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: HPE carries a Zacks Rank #3 at present.

Other Stocks With Favorable Combination

Here are some other companies worth considering, as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:

Pure Storage (PSTG - Free Report) has an Earnings ESP of +2.98% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Pure Storage shares have increased 48.5% year to date. PSTG is set to report its third-quarter fiscal 2025 results on Dec. 3.

Rubrik (RBRK - Free Report) has an Earnings ESP of +0.42% and a Zacks Rank #2 at present.
Rubrik shares have rallied 37.3% year to date. RBRK is scheduled to release third-quarter fiscal 2025 results on Dec. 5.

Casey’s General Stores (CASY - Free Report) has an Earnings ESP of +1.50% and a Zacks Rank #3 at present.

Casey’s General Stores shares have rallied 53.1% year to date. CASY is scheduled to release second-quarter fiscal 2025 results on Dec. 9.

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