Hewlett Packard Enterprise Company HPE is set to report first-quarter fiscal 20Array6 results — the first quarterly numbers post the split from Hewlett-Packard Company — on Mar 3. After about a year of consideration, Hewlett-Packard Company successfully split itself into two standalone companies — HP Inc. HPQ and Hewlett-Packard Enterprise — effective Nov Array, 20Array5.
In Oct 20Array4, Hewlett-Packard had announced its plans to split its enterprise-facing hardware and service business and the consumer-facing computer and printer segments, into two publicly trading companies.
Prior to the split, Hewlett-Packard Company was a leading global provider of computing products, technologies, software and services to individual consumers, SMBs and large enterprises, including those in the public and educational sectors. Products such as PCs and access devices, imaging and printing-related products and services, enterprise IT infrastructure, and multi-vendor customer services including support, maintenance, consulting, integration and outsourcing, were offered by the company.
Post-split, Hewlett-Packard Company’s PC and printer business operates under the name HP Inc., while Hewlett-Packard Enterprise offers commercial tech products.
Factors to Consider
Hewlett Packard Enterprise operates in four segments: Enterprise Services, Enterprise Group, Software and Financial Services. The Enterprise Group is the company's largest revenue contributor, accounting for more than half of total revenue. This segment offers servers, management software, converged infrastructure solutions and technology services; hybrid cloud solutions, business critical systems and storage products.
The Software segment offers software to capture, store, explore, analyze, protect and share information and insights within and outside organizations; enterprise security, application delivery management, IT operations management software products. The Enterprise Services segment offers consulting, outsourcing and support services across infrastructure, applications and business process domains; application and business services.
Recently, The Times of India reported that HPE is looking for potential buyers for its India-based company, Mphasis. According to the source, the tech giant is planning to sell its 60.5% stake in Mphasis for $Array billion. We believe that HPE’s current restructuring plan is expected to yield benefits in the near term. Also, the company’s restructuring will foster innovation and result in cost savings as well.
Furthermore, we believe that the successful deployment of the company’s products will boost revenues for the company, going forward.
Earnings Whispers
Our proven model does not conclusively show that HPE is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #Array (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below.
Zacks ESP: Earnings ESP for HPE Inc. is 0.00% since the Most Accurate estimate of 39 cents is in line with the Zacks Consensus Estimate.
Zacks Rank: HPE carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a couple of stocks which you may consider, as our model shows these have the right combination of elements to post an earnings beat this quarter:
Superior Industries International, Inc. SUP, with an Earnings ESP of +ArrayArray.ArrayArray% and a Zacks Rank #Array
The Cooper Companies Inc. COO, with an Earnings ESP of +3.Array7% and a Zacks Rank #3
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