Hewlett-Packard Enterprise reported fiscal fourth-quarter earnings that met views while revenue topped Wall Street targets. The company's January-quarter outlook for HPE stock came in above expectations.
The company reported earnings after the market close on Tuesday. HPE stock jumped as the S&P 500 rallied on views the Federal Reserve will slow rate hikes.
"HPE continues to see strong underlying demand trends and momentum in as-a-service orders," said Barclays analyst Tim Long in a report. "Due to supplies easing, we expect near-term revenue to stay resilient from drawing down record backlog. HPE reaffirmed fiscal 2023 revenue as well as annual recurring revenue guide."
HPE Earnings Meet Expectations
For the October quarter, HPE earnings were 57 cents a share, up 10% from a year earlier.
Revenue rose 7% to $7.9 billion, said the maker of computer servers, networking equipment and data storage systems. Analysts expected HPE earnings of 57 cents a share on sales of $7.37 billion for the period ended Oct. 31.
A year earlier, HPE earnings were 52 cents a share on sales of $7.35 billion.
For the quarter ending in January, the rival of Cisco Systems and Dell Technologies predicted earnings of 54 cents at the midpoint of its outlook versus estimates of 49 cents. HPE said it expects revenue of $7.4 billion vs. estimates of $6.98 billion.
"HPE provided a more favorable outlook than Dell or NetApp," said Raymond James analyst Simon Leopold in a report. "Dell expects servers to decline; HPE sounds more upbeat. HPE benefits from exposure to the campus market with a tailwind from share gains."
HPE Stock: Gross Margin Pressure
At an investor meeting on Oct. 19, HPE forecast fiscal 2023 earnings in a range of $1.96 to $2.04 a share, revenue growth of 2% to 3% adjusted for currency rates, and free cash flow in a range of $1.9 billion to $2.1 billion.
HPE stock rose 8.5% to close at 16.78 on the stock market today. Shares were down about 1% for 2022, heading into the HPE earnings report.
As with Cisco, HPE stock has been dealing with gross margin pressure from higher logistical costs and component pricing.
Heading into the HPE earnings report, the tech stock owned a Relative Strength Rating of 86 out of a best-possible 99, according to IBD Stock Checkup. HPE stock has formed a cup base on a technical chart.
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