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 Hewlett-Packard (NYSE: HPQ  ) jumped as much 10% today, before closing up 9% after posting a strong fourth-quarter earnings report.

So what: Revenue and earnings fell at the PC-maker, but the results beat estimates as investors saw signs that its turnaround strategy was taking hold. Sales dropped just 1% after accounting for currency translation to $29.1 billion, well ahead of estimates of $27.9 billion, while adjusted earnings per share of $1.01 beat expectations by a penny. CEO Meg Whitman said the company's "turnaround remains on track heading into fiscal 2014," and that its shift to an IT services-provider rather than a PC-maker is making headway. Enterprise sales, one bright spot, were up 2% in the quarter from a year ago.

Now what: HP's guidance for the current quarter and fiscal 2014 was within analyst estimates as the company is projecting an EPS range of $3.55-$3.75 for the full year against expectations of $3.67. Today's report also seemed to benefit from analysts' low expectations as rivals such as Cisco and IBM had disappointed the market with their earnings releases earlier in the quarter. It still seems too early to tell whether HP's turnaround strategy will pay off but its revenue slide seems to be bottoming, which is certainly a good sign. Still, with shares having more than doubled this year, there may be a limited upside until the company can once again grow profits.

Get 2014 started off right
The market stormed out to huge gains across 2013, leaving investors on the sidelines burned. However, opportunistic investors can still find huge winners. The Motley Fool's chief investment officer has just hand-picked one such opportunity in our new report: "The Motley Fool's Top Stock for 2014." To find out which stock it is and read our in-depth report, simply click here. It's free!


Read/Post Comments (0) | Recommend This Article (2)

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.

DocumentId: 2746166, ~/Articles/ArticleHandler.aspx, 4/19/2014 2:01:44 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...


Advertisement