Can Hewlett-Packard (HPQ) Keep the Earnings Streak Alive? - Analyst Blog
18 Februar 2014 - 4:50PM
Zacks
We expect Hewlett-Packard Company (HPQ) or H-P
to beat expectations when it reports first-quarter 2014 results on
Feb 20.
Why a Likely Positive Surprise?
Our proven model shows that H-P is likely to beat earnings
because it has the right combination of two key ingredients.
Zacks ESP: Earnings ESP, which represents the
difference between the Most Accurate estimate (86 cents per share)
and the Zacks Consensus Estimate (85 cents per share), stands at
+1.18%. This is very meaningful and a leading indicator of a likely
positive earnings surprise for shares.
Zacks Rank: H-P currently carries a Zacks Rank
#2 (Buy). Note that stocks with Zacks Ranks of #1, 2 and 3 have a
significantly higher chance of beating earnings. The Sell-rated
stocks (#4 and 5) should never be considered going into an earnings
announcement.
The combination of H-P’s Zacks Rank #2 and +1.18% ESP makes us
very confident in looking for a positive earnings beat.
What is Driving the Better-Than-Expected
Earnings?
H-P’s traction in the cloud, security and big data segments are
the positives, going forward. Restructuring initiatives and
management changes are also expected to keep the company on the
growth path.
H-P’s shift to core software business will also help it to
achieve long-term profitability. The company’s focus on 3D printing
segment could also be a catalyst, going forward. Additionally, the
moderation of PC sales declines should act as a positive factor for
the company. Moreover, it is noteworthy that H-P has surpassed the
Zacks Consensus Estimate in the last three out of the four quarters
with an average positive surprise of 5.69%.
However, continuing macroeconomic challenges, tepid IT spending
and competition from Lenovo, International Business
Machines (IBM) and Oracle (ORCL) are the
headwinds, going forward.
Other Stocks to Consider
Orbotech Ltd. (ORBK), with an Earnings ESP of
+12.9% and a Zacks Rank #1 (Strong Buy) is another company you may
want to consider.
HEWLETT PACKARD (HPQ): Free Stock Analysis Report
INTL BUS MACH (IBM): Free Stock Analysis Report
ORBOTECH LTD (ORBK): Free Stock Analysis Report
ORACLE CORP (ORCL): Free Stock Analysis Report
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