Shares in Hewlett Packard Enterprise rose Wednesday on fiscal first-quarter earnings that topped estimates while revenue came in slightly below expectations. The April-quarter profit guidance of HPE stock met expectations amid supply-chain issues.
The maker of computer servers, networking equipment and data storage gear reported earnings after the market close on Tuesday. HPE stock rose 5.8% to 16.31in early trading on the stock market today.
"HPE exceeded consensus gross margin and EPS and management also reaffirmed sales growth and free cash flow, with EPS revised higher," said Raymond James analyst Simon Leopold in a report. "The company reported order growth of 20%, which we consider a testament to the healthy demand and pipeline."
HPE earnings for the January quarter were 53 cents a share. Revenue rose 2% to $7 billion, the company said. Analysts expected HPE earnings of 46 cents on sales of $7.01 billion for the period ended Jan. 31.
A year earlier, HPE earnings were 52 cents a share on sales of $6.83 billion.
For the quarter ending in April, the rival of Cisco Systems and Dell Technologies forecast earnings of 45 cents at the midpoint of guidance, in line with estimates.
HPE Stock: Boost From H3C Partnership
As with Cisco, HPE stock has been dealing with gross margin pressure from higher logistical costs and component pricing.
"We are off to a strong start delivering against our fiscal 2022 commitments with our third quarter in a row of more than 20% year-over-year order growth bolstering our confidence for sustained revenue growth," Chief Financial Officer Tarek Robbiati said in written remarks in the company's earnings release.
Heading into the HPE earnings report, the tech stock had dropped 2% in 2022. HPE stock has retreated from a two-year high of 17.76 set on Feb. 10.
It's unclear how new U.S. export controls on Russia amid the Ukraine war will impact HPE's business. HPE holds a 49% minority interest in China-based technology provider H3C. A recent Barclays report estimated that HPE's "earnings from the ownership stake is growing at 15% to 20%, and now represents over 10% of total net income."
Another bright spot has been HPE's cloud-based "GreenLake" data analytics service business, analysts say.
HPE stock owns a Relative Strength Rating of 83 out of a best-possible 99, according to IBD Stock Checkup.
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Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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