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Hewlett-Packard Beats on EPS But GAAP Results Lag

By Seth Jayson – Updated Apr 10, 2017 at 1:12PM

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Just the facts, Fool.

Hewlett-Packard (NYSE: HPQ) reported earnings on May 22. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended April 30 (Q2), Hewlett-Packard missed slightly on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue dropped. Non-GAAP earnings per share dropped. GAAP earnings per share dropped significantly.

Gross margins grew, operating margins shrank, net margins dropped.

Revenue details
Hewlett-Packard booked revenue of $27.58 billion. The 26 analysts polled by S&P Capital IQ expected a top line of $28.02 billion on the same basis. GAAP reported sales were 10% lower than the prior-year quarter's $30.69 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.87. The 30 earnings estimates compiled by S&P Capital IQ predicted $0.81 per share. Non-GAAP EPS of $0.87 for Q2 were 11% lower than the prior-year quarter's $0.98 per share. GAAP EPS of $0.55 for Q2 were 31% lower than the prior-year quarter's $0.80 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 23.7%, 40 basis points better than the prior-year quarter. Operating margin was 7.3%, 20 basis points worse than the prior-year quarter. Net margin was 3.9%, 130 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $27.48 billion. On the bottom line, the average EPS estimate is $0.87.

Next year's average estimate for revenue is $112.12 billion. The average EPS estimate is $3.55.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 3,399 members out of 3,804 rating the stock outperform, and 405 members rating it underperform. Among 756 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 669 give Hewlett-Packard a green thumbs-up, and 87 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Hewlett-Packard is hold, with an average price target of $19.06.

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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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