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Why Is Hewlett Packard Enterprise (HPE) Down 19.7% 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 lost about 19.7% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Hewlett Packard Enterprise due for a breakout? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent catalysts for Hewlett Packard Enterprise Company before we dive into how investors and analysts have reacted as of late.
Hewlett Packard Enterprise reported better-than-expected results for second-quarter fiscal 2026. HPE’s non-GAAP earnings of 79 cents per share beat the Zacks Consensus Estimate by 46.3% and increased 107.9% year over year.
HPE posted revenues of $10.7 billion for the quarter, beating the Zacks Consensus Estimate by 8.7%. The company’s revenues increased 40.0% year over year.
HPE’s quarterly performance was supported by strong demand across the portfolio, with orders more than doubling year over year and driving a record backlog. Management also highlighted progress in Juniper integration and the Catalyst initiative, which remained ahead of schedule.
HPE’s Segment-Wise Performance
Hewlett Packard’s Networking segment generated $2.7 billion in revenues in the second quarter of fiscal 2026, up 148.2% year over year. The segment’s operating profit margin was 21.6%, down from 25.0% in the year-ago quarter.
Within Networking, Campus & Branch revenues were $1.3 billion, up 50.2% year over year. Data Center Networking revenues were $320 million, up 233.3%, and Security revenues were $273 million, up 155.1%. Routing revenues were $775 million compared with $1 million in the year-ago quarter.
The Cloud & AI segment reported $7.7 billion in revenues, up 22.9% year over year, with an operating profit margin of 12.4%, up from 6.6% in the prior-year period.
Within Cloud & AI, Server revenues were $5.5 billion, up 32.7% year over year. Storage revenues totaled $1.2 billion, up 2.4%, while Financial Services contributed $0.9 billion, up 5.6% year over year.
HPE’s Corporate Investments and Other revenues came in at $281 million, up 3.3% from the prior-year period.
HPE’s Operating Results
Hewlett Packard’s non-GAAP gross profit for the second quarter of fiscal 2026 was $3.94 billion compared with $2.24 billion in the year-ago quarter, while the non-GAAP gross margin expanded to 36.9%, up 750 basis points year over year.
The company’s non-GAAP operating profit was $1.4 billion compared with $613 million in the year-ago quarter. The non-GAAP operating margin improved to 13.3%, up 530 basis points from the year-ago quarter.
HPE’s Balance Sheet and Cash Flow
Hewlett Packard ended the second quarter with $5.29 billion in cash and cash equivalents compared with $4.84 billion at the end of the previous quarter.
In the second quarter, HPE generated $1.4 billion in cash from operating activities and produced $915 million in free cash flow. The company returned $343 million through dividends and share repurchases during the quarter.
HPE Updates FY26 Guidance
Hewlett Packard raised its outlook following the strong quarter and improved second-half visibility. For the third quarter of fiscal 2026, HPE expects revenues in the range of $11.5-$12.1 billion.
It anticipates non-GAAP earnings per share of 88-93 cents.
For fiscal 2026, HPE raised its revenue growth outlook to 29-33% and expects non-GAAP earnings per share of $3.35-$3.45.
The company also lifted its free cash flow outlook and now expects free cash flow to be at least $3.5 billion. Separately, HPE introduced a fiscal 2027 framework calling for revenue growth of 8-12% and free cash flow of at least $4.5 billion.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 71.61% due to these changes.
VGM Scores
At this time, Hewlett Packard Enterprise has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock has a grade of B on the value side, putting it in the second quintile for value investors.
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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Hewlett Packard Enterprise has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
View the Zacks #1 Rank List
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Why Is Hewlett Packard Enterprise (HPE) Down 19.7% Since Last Earnings Report?
It has been about a month since the last earnings report for Hewlett Packard Enterprise (HPE - Free Report) . Shares have lost about 19.7% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Hewlett Packard Enterprise due for a breakout? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent catalysts for Hewlett Packard Enterprise Company before we dive into how investors and analysts have reacted as of late.
HPE Q2 Earnings Surpass Expectations, Revenues Rise Y/Y
Hewlett Packard Enterprise reported better-than-expected results for second-quarter fiscal 2026. HPE’s non-GAAP earnings of 79 cents per share beat the Zacks Consensus Estimate by 46.3% and increased 107.9% year over year.
HPE posted revenues of $10.7 billion for the quarter, beating the Zacks Consensus Estimate by 8.7%. The company’s revenues increased 40.0% year over year.
HPE’s quarterly performance was supported by strong demand across the portfolio, with orders more than doubling year over year and driving a record backlog. Management also highlighted progress in Juniper integration and the Catalyst initiative, which remained ahead of schedule.
HPE’s Segment-Wise Performance
Hewlett Packard’s Networking segment generated $2.7 billion in revenues in the second quarter of fiscal 2026, up 148.2% year over year. The segment’s operating profit margin was 21.6%, down from 25.0% in the year-ago quarter.
Within Networking, Campus & Branch revenues were $1.3 billion, up 50.2% year over year. Data Center Networking revenues were $320 million, up 233.3%, and Security revenues were $273 million, up 155.1%. Routing revenues were $775 million compared with $1 million in the year-ago quarter.
The Cloud & AI segment reported $7.7 billion in revenues, up 22.9% year over year, with an operating profit margin of 12.4%, up from 6.6% in the prior-year period.
Within Cloud & AI, Server revenues were $5.5 billion, up 32.7% year over year. Storage revenues totaled $1.2 billion, up 2.4%, while Financial Services contributed $0.9 billion, up 5.6% year over year.
HPE’s Corporate Investments and Other revenues came in at $281 million, up 3.3% from the prior-year period.
HPE’s Operating Results
Hewlett Packard’s non-GAAP gross profit for the second quarter of fiscal 2026 was $3.94 billion compared with $2.24 billion in the year-ago quarter, while the non-GAAP gross margin expanded to 36.9%, up 750 basis points year over year.
The company’s non-GAAP operating profit was $1.4 billion compared with $613 million in the year-ago quarter. The non-GAAP operating margin improved to 13.3%, up 530 basis points from the year-ago quarter.
HPE’s Balance Sheet and Cash Flow
Hewlett Packard ended the second quarter with $5.29 billion in cash and cash equivalents compared with $4.84 billion at the end of the previous quarter.
In the second quarter, HPE generated $1.4 billion in cash from operating activities and produced $915 million in free cash flow. The company returned $343 million through dividends and share repurchases during the quarter.
HPE Updates FY26 Guidance
Hewlett Packard raised its outlook following the strong quarter and improved second-half visibility. For the third quarter of fiscal 2026, HPE expects revenues in the range of $11.5-$12.1 billion.
It anticipates non-GAAP earnings per share of 88-93 cents.
For fiscal 2026, HPE raised its revenue growth outlook to 29-33% and expects non-GAAP earnings per share of $3.35-$3.45.
The company also lifted its free cash flow outlook and now expects free cash flow to be at least $3.5 billion. Separately, HPE introduced a fiscal 2027 framework calling for revenue growth of 8-12% and free cash flow of at least $4.5 billion.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 71.61% due to these changes.
VGM Scores
At this time, Hewlett Packard Enterprise has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock has a grade of B on the value side, putting it in the second quintile for value investors.
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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Hewlett Packard Enterprise has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.