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Did Hewlett Packard Enterprise Beat Estimates Again in Q1?

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Feb. 26 2019, Published 8:06 a.m. ET

Hewlett Packard Enterprises beats estimates

Hewlett Packard Enterprises (HPE) has managed to beat analysts’ earnings estimates for the past six quarters. Earnings have also been growing sequentially for the past six quarters except the first quarter of fiscal 2019, where earnings declined on a sequential basis. In the most recent first quarter, Hewlett Packard posted non-GAAP EPS of $0.42, beating the consensus estimate of $0.32.

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Reasons for the improving earnings trend 

In the first quarter, the enterprise software player reported GAAP earnings of $0.13 per share, down 85.9% YoY due to US tax reforms and other one-time adjustments. The company’s adjusted earnings of $0.42 were higher than the company’s guidance range of $0.33 to $0.37 per share. First-quarter earnings were also 31.3% higher YoY than the prior-year quarter’s earnings of $0.32 per share.

Significantly higher gross and operating margins drove Hewlett Packard’s strong YoY earnings growth. The company’s operating margin was backed by cost-saving measures, which led to a rise in profitability. However, the sequential decline in the earnings was probably due to softness in demand for servers.

HP Enterprise and HP (HPQ) split from Hewlett-Packard in 2015. HP is expected to release its first-quarter fiscal 2019 earnings results on February 27. Peer Cisco Systems (CSCO) also posted better-than-expected earnings of $0.73 per share in the second quarter of fiscal 2019 on February 13. NetApp (NTAP) also posted upbeat earnings of $1.20 per share for the third quarter fiscal 2019 on February 13. Juniper (JNPR) and GoPro (GPRO) also reported better-than-expected earnings in their respective fourth quarter of 2018 results. 

Earnings expectations for Q2

Hewlett Packard Enterprises (HPE) expects its second quarter of fiscal 2019 earnings to be in the range of $0.34–$0.38 per share, lower than the prior-year levels as well as the preceding quarter. The company reported adjusted earnings of $0.42 in both the second quarter of fiscal 2018 and the first quarter of fiscal 2019. Analysts expect earnings of $0.36 for the second quarter.

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