Hewlett Packard Enterprise Company (Ticker Symbol: HPE) reported better than expected earnings that beat on the top and bottom lines on Tuesday. The technology giant reported earnings per share of .44 cents vs. Wall Street analysts’ expectations of .37 cents per share. Hewlett Packard’s net revenue beat Wall Street’s expectations, reporting a revenue of $7.76 billion vs. analysts’ estimates of $7.68 billion. The company’s revenue was up 3.5% year over year. The hybrid IT business segment is the largest portion of Hewlett Packard’s revenue that includes computer, storage, and data center networking. Revenue reported from this segment was $6.24 billion vs. analysts’ estimates of $6.16 billion.
In June of last year, Hewlett Packard committed to investing over $4 billion in Intelligent Edge technologies and services over the next four years. Intelligent Edge is a set of connected systems and devices that analyze user data. The technology can be used for a variety of things like security, edge computing, location based services, analytics. The investments Hewlett Packard will make will also support research and development to help increase and innovate new products in security, artificial intelligence, machine learning, and automation.
Above is a chart of Hewlett Packard’s stock over the past two and a half years. Hewlett Packard began 2017 trading within a 13-month trading range between the $13.00 and $15.00 price levels. Finally in the first quarter of 2018, the stock broke out of its trading range to the upside. Hewlett Packard continued to rally over 25%, led by a positive earnings gap higher from its first quarter earnings release. Unfortunately for shareholders, the stock took a put in its high for the year and began to turn negative in the second quarter of 2018. Over the next six months, the stock began trading in a descending triangle pattern. Descending triangles are generally a bearish pattern and the majority of the time are found in downtrends. The bottom part of the triangle appears flat and the top part of the triangle has a downward slant. The stock broke lower from this pattern in the fourth quarter of 2018.
Hewlett Packard’s stock took off to a solid start in 2019, recovering from the December 2018 lows, and rallying over 40%. The stock put in a Double Top formation. Traders and investors sometimes look at Double Top patterns for a possible pause within the current trend which can, at times, lead to a reversal, as occurred in Hewlett Packard’s case. This stock is now finding some resistance at its 50-day Moving Average.
(Chart above courtesy of www.tipranks.com)
Based on a survey of 8 analysts offering 12-month price targets, the average price target for Hewlett Packard’s stock is $16.00. According to that number, the stock is priced at a discount relative to Wall Street’s analysts and could be considered undervalued around current levels near $14.87.
Hewlett Packard announced this week that it has appointed a new chief financial officer, Tarek Robbaiti, who will replace Tim Stonesifer. Robbaiti was the chief financial officer of Sprint for two and a half years and was known for greatly reducing Sprint’s operating expenses. Investors in the company should look to competitor, International Business Machines Corporation’s (Ticker Symbol: IBM) earnings release on July 17th for fresh news within the sector.