Will Hewlett-Packard (HPQ) Surprise This Earnings Season? - Analyst Blog
19 Mai 2014 - 4:00PM
Zacks
Hewlett-Packard Company (HPQ) is set to report
the second-quarter fiscal 2014 results on May 22. Last quarter, the
company posted positive earnings surprise of 5.88%. Let us see how
things are shaping up for this announcement.
Factors this Past Quarter
Hewlett-Packard reported better-than-expected first-quarter
results on the back of higher IP sales and cost cutting initiatives
which aided margins. The share buybacks also supported
earnings.
Going forward, we believe that Hewlett-Packard’s strategic focus
on the software business will help it to diversify its revenue
source which is predominantly dependent on PCs. Additionally, the
company’s traction in the cloud, security and big data segments are
the positives. Hewlett-Packard’s probable entry into the 3D
printing market should be another growth catalyst given the rapid
adoption of 3D technology across industries.
Nonetheless, macroeconomic challenges, shrinking PC industry and
tepid IT spending are the challenges in the near term. Competition
from International Business Machines and Oracle remain the
headwinds, going forward.
Earnings Whispers?
Our proven model does not conclusively show that Hewlett-Packard
will beat earnings this quarter. That is because a stock needs to
have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for
this to happen. That is not the case here as you will see
below.
Zacks ESP: Both the Most Accurate estimate and
the Zacks Consensus Estimate stand at 88 cents. Hence, the
difference is 0.00%.
Zacks Rank: Hewlett-Packard’s Zacks Rank #2
(Buy) when combined with a 0.00% ESP makes surprise prediction
difficult.
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here are some other companies you may want to consider as our
model shows they have the right combination of elements to post an
earnings beat this quarter:
Intuit Inc. (INTU), with Earnings ESP of +1.18%
and a Zacks Rank #2.
Best Buy Co., Inc. (BBY), with Earnings ESP of
+5.00% and a Zacks Rank #2.
Nimble Storage, Inc. (NMBL), with Earnings ESP
of +6.25% and a Zacks Rank #3 (Hold).
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