Hewlett-Packard Company (NYSE:HPQ) will report its fiscal Q2, 2014 results on Thursday, May 22 after the market closes. Analysts on average expects the computer company to report revenues of $27.41 billion, down 0.60% from $27.58 billion in the same quarter last year. Its earnings per share are expected to inch up from 87 cents to 88 cents.
Hewlett-Packard likely to see modest upside in earnings
RBC Capital Markets analyst Amit Daryanani said in a research note that he expects Hewlett-Packard Company (NYSE:HPQ) to report a modest upside in earnings despite seasonal headwinds and soft enterprise spending that may hurt its revenues. The research firm calls for $27.19 billion in revenues with $0.88 in EPS. Mr. Daryanani expects Hewlett-Packard’s gross margins to come in at 23.1% with 8.6% in operating margins. For the full year 2014, he expects $111.80 billion in sales and $3.68 per share in profits.
Hewlett-Packard Company (NYSE:HPQ)’s PC shipments rose 4% YoY in the first three months of this year, well above RBC Capital Markets’ expectations. During the quarter, the company didn’t engage in fierce price competition. Assuming a 4% ASP erosion, revenues in the PC segment should increase by at least $150 million. However, Daryanani expects the company’s Imaging and Printing group revenue to decline 3% QoQ to $6.01 billion.
These Are John Buckingham’s Stock Picks For 2021
The economy remains in distress, although there are signs of recovery underway. John Buckingham of Kovitz, editor of The Prudent Speculator newsletter, has found that value stocks typically outperform coming out of economic downturns. Thus, he argues that this is an excellent time to be a value investor. Q4 2020 hedge fund letters, conferences and Read More
Soft server demand to hurt Hewlett-Packard’s enterprise revenues
The research firm forecasts that revenues from Hewlett-Packard Company (NYSE:HPQ)’s Enterprise group are set to decline 6% QoQ due to soft server demand, and related impact on technology services revenue. The Enterprise group revenues are likely to come in at $6.59 billion. According to research firm Gartner, Hewlett-Packard’s server units declined 8% YoY during the quarter, bringing down its market share by 220 basis points.
RBC Capital Markets expects Hewlett-Packard Company (NYSE:HPQ)’s Enterprise Services revenues to decline 6% YoY during the quarter to $5.65 billion. For the full year 2014, Enterprise Services revenues are expected to plunge 5%. Though service margins stood at just 1% in Q1, 2014, HP management is confident that operating margins will recover to 3.5%-4% for the full year. Amit Daryanani expects Hewlett-Packard to generate a healthy $1.4 billion in free cash flow during the April quarter.
RBC Capital Markets has a Sector Perform rating on the stock with $36 price target. Hewlett-Packard Company (NYSE:HPQ) shares gained 0.58% to $32.71 at 10:55 AM EDT on Thursday.