HPE shares slip in after hours; 200-weekly moving average is in play
Hewlett Packard Enterprise (HPE) has released its Q1 (January) earnings report. Shares were trading below the 20-sma ahead of the report. HPE needed to post a solid round of results to re-establish ground above the level. It failed to meet up to expectations, leading to an after hours flush lower. The stock will try to hold the 200-weekly MA ($14.42) tomorrow.
The company reported earnings per share (EPS) of $0.48, surpassing the consensus of $0.45. However, revenues fell 13.5% year-over-year to $6.75 billion, missing theconsensus of $7.09 billion. The decrease in revenue can be attributed to the challenges faced by the company in the Server and Hybrid Cloud segments.
Looking ahead, HPE has provided downside guidance for Q2, expecting EPS of $0.36 to $0.41, compared to the consensus of $0.45. The company anticipates Q2 revenue to be between $6.6 billion and $7.0 billion, also missing the consensus of $7.12 billion.
HPE's revenue breakdown by segment shows a mixed performance. Server revenue declined 23% from the prior-year period, while Intelligent Edge revenue increased 3% and Hybrid Cloud revenue decreased 10%. Financial Services revenue remained flat in actual dollars but declined 2% in constant currency.
HPE's profit margins have also been impacted, with a 140 basis points sequential increase in non-GAAP gross margins and a 3.8% operating profit margin in the Hybrid Cloud segment, compared to 5.8% in the prior-year period.
For the full fiscal year 2024, HPE has issued in-line guidance, predicting EPS of $1.82 to $1.92, excluding non-recurring items, in line with the FactSet Consensus of $1.92. The company expects full-year revenue to remain flat to +2% year-over-year or between $29.135 billion and $29.718 billion, compared to the FactSet Consensus of $29.45 billion.
Despite the challenges, HPE remains committed to returning value to its shareholders. The company repurchased $172 million in the form of dividends and share repurchases during the quarter.
HPE's outlook for Q2 and the full fiscal year 2024 reflects the company's resilience and adaptability in the face of market headwinds. The company expects revenue growth to be flat to 2% in constant currency and GAAP operating profit growth to be in the range of 7% to 11%. HPE also anticipates free cash flow to be at least $1.9 billion.
In conclusion, HPE's Q1 earnings report highlights the company's ability to maintain growth and profitability in a challenging market environment. The company's focus on returning value to shareholders and its commitment to innovation and operational efficiency bode well for its long-term prospects.
Overall, HPE's Q1 earnings report demonstrates the company's resilience and adaptability in the face of market headwinds. The company's commitment to returning value to shareholders and its focus on innovation and operational efficiency bode well for its long-term prospects. As the market continues to evolve, HPE remains well-positioned to capitalize on emerging opportunities and deliver value to its stakeholders.