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What Awaits Hewlett Packard Enterprise (HPE) in Q2 Earnings?

Hewlett Packard Enterprise HPE is slated to report second-quarter fiscal 2024 results, after market close, on Jun 4.

For the fiscal second quarter, Hewlett Packard Enterprise projects non-GAAP earnings per share between 36 cents and 41 cents. The Zacks Consensus Estimate for earnings is pegged at 38 cents, indicating a year-over-year decline of 26.9%.

HPE expects second-quarter revenues between $6.6 billion and $7 billion. The consensus mark for quarterly revenues is pegged at $6.83 billion, suggesting a decrease of 2% from the year-ago period.

The company’s earnings surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 7%.

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Let’s see how things are shaping up for this announcement.

Hewlett Packard Enterprise Company Price and EPS Surprise

Hewlett Packard Enterprise Company price-eps-surprise | Hewlett Packard Enterprise Company Quote

Factors to Note

Hewlett Packard Enterprise’s fiscal second-quarter results are expected to have been hampered by soft IT spending. Enterprises has been postponing their large IT spending plans due to a weakening global economy amid ongoing macroeconomic and geopolitical issues.

The company has been facing headwinds in its Intelligent Edge business. Customer inventory saturation owing to past year’s purchases is likely to have hurt the segment’s performance in the to-be-reported quarter.

The demand for Hewlett Packard Enterprise’s AI Server is anticipated to have remained strong during the second quarter. However, limited graphic processing unit availability is likely to have been the big hurdle in meeting demand, thereby hurting the segment’s revenue growth.

However, strength in HPE’s as-a-service platform and contributions from high-performance computing & modular cooling systems are likely to have somewhat offset the negative impact of tepid IT spending.

The increasing adoption of the Aruba Edge Services Platform and HPE GreenLake are expected to have driven Hewlett Packard Enterprise’s revenues in the to-be-reported quarter. The HPE GreenLake solution is likely to have benefited from the company’s effort to simplify its cloud strategy by including all related products in the hybrid cloud segment. This initiative is expected to have simplified the customer adoption of the solution and added to the top line.

The company has been benefiting from persistent growth in sales of its accelerator processing unit, primarily driven by rising demand of HPE Cray EX, Cray XT and HPE ProLiant Gen11 AI-optimized servers.

Hewlett Packard Enterprise’s gross margin is likely to have improved during the quarter, driven by a strong pricing discipline, the benefits of an improving supply chain, a positive mix shift to high-margin software-rich businesses, cost takeouts and automation.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Hewlett Packard Enterprise this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here.

Though Hewlett Packard Enterprise carries a Zacks Rank #3 at present, it has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Per our model, Micron Technologies MU, Broadcom AVGO and Bath & Body Works BBWI have the right combination of elements to post an earnings beat in their upcoming releases.

Micron Technologies has an Earnings ESP of +5.22% and carries a Zacks Rank #2 at present. The company is scheduled to report third-quarter 2024 results on Jun 26. Its earnings estimates surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 69.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for MU’s third-quarter earnings is pegged at 47 cents per share, indicating a significant improvement from the year-ago quarter’s loss of $1.43. The consensus mark for revenues is pinned at $6.64 billion, indicating a year-over-year increase of 76.9%.

Broadcom has an Earnings ESP of +3.66% and carries a Zacks Rank #3 at present. The company is scheduled to report second-quarter 2024 results on Jun 12. Its earnings beat the Zacks Consensus Estimate in each of the last four quarters, delivering an average surprise of 2.8%.

The Zacks Consensus Estimate for AVGO’s earnings is pegged at $10.79 per share, indicating year-over-year growth of 4.6%. The consensus mark for revenues is pegged at $12.04 billion, implying an increase of 37.9% from the year-ago quarter.

Bath & Body Works has an Earnings ESP of +5.23% and a Zacks Rank #2 at present. The company is slated to report first-quarter 2024 results on Jun 4. Its earnings estimates surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 23.2%.

The Zacks Consensus Estimate is pegged at 33 cents per share, which has remained flat year over year. The consensus mark for BBWI’s revenues is pegged at $1.37 billion, indicating a 2.1% year-over-year decline.

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Micron Technology, Inc. (MU) : Free Stock Analysis Report

Broadcom Inc. (AVGO) : Free Stock Analysis Report

Hewlett Packard Enterprise Company (HPE) : Free Stock Analysis Report

Bath & Body Works, Inc. (BBWI) : Free Stock Analysis Report

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