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HPE Continues to Beat Analyst Earnings Estimates in Fiscal 2018

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Dec. 4 2020, Updated 10:53 a.m. ET

HPE beat EPS by 19% in fiscal Q3

In the previous part of this series, we saw that Hewlett Packard Enterprise stock has risen close to 18% this year. HPE has exceeded earnings estimates in the last four quarters, which has boosted the company’s stock.

HPE beat earnings estimates of $0.37 in fiscal Q3 by 19% with posted non-GAAP (generally accepted accounting principles) EPS of $0.44. HPE also beat EPS estimates of $0.31 in Q2 by 9.7% with reported EPS of $0.34.

HPE reported EPS of $0.34 in fiscal Q1 2018 and beat estimates of $0.22 by 54.5%, while the company beat estimates of $0.28 by 10.7% in fiscal Q4 2017 when it reported earnings of $0.31.

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During HPE’s earnings call, CEO Antonio Neri stated, “Our focus on shifting our mix to higher-value growth areas while optimizing our volume business is working. This is supported by excellent execution of HPE Next, our initiative to re-architect the Company from the ground up with a goal of driving better operational efficiency and effectiveness.”

Need to improve operational efficiency

HPE is operating in a mature networking business segment. Though the company is targeting high growth verticals and acquisitions to drive revenue, it needs to improve operational efficiency to offset a slow-growing business environment.

HPE reported an operating margin of 9.6% in Q3. Operating margins for peer storage and networking companies such as Cisco (CSCO), NetApp (NTAP), and Juniper (JNPR) are estimated at 31.3%, 21.8%, and 17.4%, respectively, for the current fiscal year.

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