What happened

Hewlett Packard (NYSE:HPE) stock underperformed a weak market last month as the stock fell 13% compared with a 7% decline in the S&P 500, according to data provided by S&P Global Market Intelligence.

The decline pushed shares to below the broader market's return so far in 2019, up just 6% compared with the S&P 500's 15% increase.

A customer service representative at work in front of a computer.

Image source: Getty Images.

So what

The company announced mixed earnings results on May 23. Sales declined 2% after adjusting for currency exchange-rate shifts, as demand slipped in each of its three main product segments. But HPE beat earnings expectations thanks to rising profitability and surging cash flow.

Now what

CEO Antonio Neri and his team raised their earnings outlook for the year to reflect the improving cost and pricing trends. For the stock to generate significant returns for investors, though, the business will need to demonstrate a path toward sustainable sales growth. Wall Street isn't expecting HPE to meet that challenge this year, as most investors who follow the stock are predicting flat sales in 2019 and only a modest 1% uptick next year.

 

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