Will Hewlett-Packard Earnings Move the Dow?

Earnings season is now starting to wind down, with most companies already having reported their quarterly results. But there are still some companies left to report, and Hewlett-Packard (NYSE: HPQ  ) is up on Thursday. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed, knee-jerk decision.

Hewlett-Packard was the worst performer in the Dow Jones Industrial Average (DJINDICES: ^DJI  ) in 2012, falling more than 40%. But the company has rebounded sharply recently on hopes that a turnaround may be coming. Let's take an early look at what's been happening with Hewlett-Packard over the past quarter and what we're likely to see in its quarterly report on Thursday.

Stats on Hewlett-Packard

Analyst EPS Estimate

$0.71

Change From Year-Ago EPS

(23%)

Revenue Estimate

$27.8 billion

Change From Year-Ago Revenue

(7.6%)

Earnings Beats in Past 4 Quarters

4

Source: Yahoo Finance.

Will Hewlett-Packard finally get its mojo back?
HP hasn't inspired much confidence among analysts in recent months, with consensus earnings-per-share figures for the just-ended quarter having dropped fully $0.15, while full-year fiscal 2013 calls are down $0.20 per share. Shareholders, however, have concluded that the stock is a reasonable value play and have boosted share prices by nearly 30% since mid-November.

This quarter was supposed to be a turnaround for HP, as the release of Windows 8 was meant to set the stage for a rebound in PC sales. But that didn't happen, and we're already familiar with much of the aftermath, as sales figures have come in well below what most investors had hoped to see.

Instead, the big news for HP came after its fiscal quarter ended, as Dell (UNKNOWN: DELL.DL  ) announced it was going private with the help of a private-equity firm and some financing from Microsoft (NASDAQ: MSFT  ) . Many analysts immediately concluded that a Dell-Microsoft partnership would be bad for HP, but it may have pushed HP toward making Android-powered devices. Last week, reports surfaced that HP would use a Tegra 4 processor from NVIDIA (NASDAQ: NVDA  ) as the basis for a tablet to rival Microsoft's Surface, and a smartphone may not be too far off. Of course, HP is awfully late to the mobile game, and memories of its failed TouchPad loom large in the company's collective consciousness.

In HP's earnings report, it'll be far more important for the company to explain its strategy going forward than to produce good numbers. For instance, even as HP says it wants to de-emphasize its PC lineup, it recently released a low-priced Chromebook, opening itself up to further low-margin sales. Moves like this sap shareholders' patience, and that's something HP can ill afford after its big declines.

Learn more
Many investors think HP is doomed to eventual failure, but others see it as arguably the least appreciated turnaround story in the stock market today. Find out which side has it right by reading our premium research report on HP, in which The Motley Fool's technology analyst details exactly what investors need to know about the company and its future prospects. Just click here now to get your copy today.

Click here to add Hewlett-Packard to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


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