Shares in Hewlett Packard Enterprise fell Thursday after fiscal second-quarter earnings and revenue missed Wall Street targets. The company's July-quarter outlook for HPE stock also came in below expectations amid supply-chain issues.
"HPE missed fiscal Q2 revenue and EPS mainly on delayed HPC (high performance computing) revenue acceptance," Barclays analyst Tim Long said in a note to clients. "Full year EPS was also lowered to account for China, Russia and currency headwinds. Despite continued strong 20%-plus order growth and demand trends, inability to convert to revenue from backlog is concerning."
At Goldman Sachs, analyst Rod Hall said in a report: "HPE highlighted that orders were up more than 20% in fiscal Q2 versus flat revenue year-over-year. The company expects backlog to continue to grow for the remainder of fiscal 2022 while supply constraints continue."
HPE Stock: Order Growth To Normalize?
Hall added: "Looking ahead, we expect order growth to normalize as HPE approaches tougher comparisons as well as a potential slowdown in enterprise IT spending."
HPE earnings for the April quarter were 44 cents a share, down 4% from a year earlier, amid the impact of Russia-related operations.
Revenue rose a fraction to $6.7 billion, the company said. Analysts expected HPE earnings of 45 cents on sales of $6.81 billion for the period ended April 30.
A year earlier, HPE earnings were 46 cents a share on sales of $6.7 billion.
For the quarter ending in July, the rival of Cisco Systems and Dell Technologies predicts earnings of 49 cents at the midpoint of its outlook versus estimates of 51 cents.
HPE Stock: Gross Margin Pressure
The maker of computer servers, networking equipment and data storage gear reported earnings after the market close on Wednesday. HPE stock fell 5.2% to close at 14.96 on the stock market today.
As with Cisco, HPE stock has been dealing with gross margin pressure from higher logistical costs and component pricing.
"We are particularly pleased with the resiliency of our gross margins despite the inflationary environment and ongoing supply chain disruptions," Chief Financial Officer Tarek Robbiati said in the earnings release. "With record levels of high-quality backlog, we are well positioned for growth in 2022 and beyond."
Heading into the HPE earnings report, the tech stock owned a Relative Strength Rating of 83 out of a best-possible 99, according to IBD Stock Checkup.
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