Why Hewlett-Packard Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of beaten-down tech leader Hewlett-Packard (NYSE: HPQ  ) have posted one of their largest gains in recent memory following a positive earnings report. Shares are up roughly 9% as of this writing.

So what: HP's fiscal first quarter came in with $28.4 billion in revenue and earnings of $0.82 per share. Although revenue was 6% lower than the year-ago quarter, it still handily beat Wall Street's lowball consensus of $27.8 billion. The $0.71 EPS consensus was soundly thrashed.

Looking ahead, HP now expects EPS in the $0.80 to $0.82 range for the second quarter and $3.40 to $3.60 for the full year. Both guidance ranges come in ahead of Wall Street's estimates, which sought $0.77 for the second quarter and $3.33 for the year.

Now what: The upper bound of HP's EPS guidance would bring the company roughly back to where it was after the awful year that was 2012, with its write-offs and writedowns and botched turnarounds and so forth. However, virtually every segment saw revenue decline year over year, with HP's financial services group the only one to show a top-line gain. A forward P/E of just 4.7 means that HP is undeniably cheap, and the stock offers a reasonable dividend as well. Gains from this point on may be driven more by a return to valuation means than by any fundamental improvements in HP's increasingly dated-looking business.

The massive wave of mobile computing has done much to unseat the major players in the PC market, including venerable technology names like Hewlett-Packard. However, HP's rapidly shifting its strategy under the new leadership of CEO Meg Whitman. But does this make HP one of the least-appreciated turnaround stories on the market, or is this a minor blip on its road to irrelevance? The Motley Fool's technology analyst details exactly what investors need to know about HP in our new premium research report. Just click here now to get your copy today.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2460131, ~/Articles/ArticleHandler.aspx, 9/29/2016 1:32:40 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,171.87 -167.37 -0.91%
S&P 500 2,152.21 -19.16 -0.88%
NASD 5,276.49 -42.06 -0.79%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/29/2016 1:16 PM
HPQ $15.47 Down -0.02 -0.13%
HP CAPS Rating: ***