Hewlett Packard Enterprise (HPE - Free Report) saw its stock price jump 3.3% during regular trading hours Monday as part of a larger tech and market resurgence driven by the weekend’s positive trade war news. So, let’s see what to expect from Hewlett Packard Enterprise’s quarterly financial results Tuesday to help us understand if the company might be able to keep this momentum going.
Overall, some of the biggest names in tech from Nvidia (NVDA - Free Report) to Apple (AAPL - Free Report) have seen their stock prices fall during the last few months. Yet, the tech sector as a whole has performed rather well during third-quarter earnings season, with total earnings up 27% from the same period last year on 13% higher revenues (also read: Q3 Earnings Season Scorecard).
Last quarter, HPE saw its revenues jump 4% to $7.76 billion. However, the company, which was officially formed in 2015 after Hewlett-Packard split into HPE and HP Inc. (HPQ - Free Report) , has failed to live up to investor expectations. The firm sells enterprise-level servers, storage, and networking gear, and has lost ground to the likes of Cisco (CSCO - Free Report) and Dell (DVMT - Free Report) . Plus, the cloud-computing age has seen Amazon (AMZN - Free Report) and Microsoft (MSFT - Free Report) eat away at its business.
With all that said, Hewlett Packard Enterprise’s quarterly earnings are projected to pop 2.5% to reach $7.85 billion, according to our Zacks Consensus Estimate. Better yet, the company’s adjusted quarterly earnings are excepted to soar 48.3% to reach $0.43 per share. Still, we need to know how likely it is that HPE tops our quarterly earnings estimate since this could determine how the company’s stock trades following its release.
Luckily, we can turn to our exclusive Earnings ESP figure to help us. The Zacks Earnings ESP (Expected Surprise Prediction) compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter. The Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change.
This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.
A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.
HPE is currently a Zacks Rank #3 (Hold) and sports an Earnings ESP of 0.00%. Unfortunately, this means that our model is inconclusive. But, investors should note that the company has topped our quarterly earnings estimates in the trailing four periods.
Hewlett Packard Enterprise is set to release its fiscal fourth quarter financial results after the closing bell Tuesday.
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