On Nov. 16, technology powerhouse Hewlett-Packard (NYSE:HPQ) released earnings for the 2006 fiscal year ended Oct. 31.
- Restructuring charges had a serious impact on 2005 earnings, though less so for the full year than the fourth quarter, proportionally speaking. Disregarding the $158 million charge in 2006 and $1.68 billion in 2005, earnings grew 55.7%, and net margins expanded a bit slower at 2.2 percentage points.
- Even at that, it's hard to be disappointed about more than 50% earnings growth, especially since cash flows also expanded and the balance sheet looks exceedingly healthy.
- Every business segment grew revenues and operational income, save for a slight sales downtick at HP Financial Services. The star performance came from the Technology Solutions group, which increased income by 60% to $3 billion on a mere 2.7% revenue boost.
(Figures in millions, except per-share and cash-conversion data)
Income Statement Highlights
|
Avg. Est. |
FY 2006 |
FY 2005 |
Change | |
|---|---|---|---|---|
|
Sales |
$91,230 |
$91,658 |
$86,696 |
5.7% |
|
Net Profit |
-- |
$6,198 |
$2,398 |
158.5% |
|
EPS |
$2.18 |
$2.17 |
$0.82 |
164.6% |
|
Diluted Shares |
-- |
2,852 |
2,909 |
(2.0%) |
Get back to basics with a look at the income statement.
Margin Checkup
|
FY 2006 |
FY 2005 |
Change* | |
|---|---|---|---|
|
Gross Margin |
24.25% |
23.36% |
0.89 |
|
Operating Margin |
7.16% |
4.01% |
3.15 |
|
Net Margin |
6.76% |
2.77% |
3.99 |
Margins are the earnings engine. See how they work.
Balance Sheet Highlights
|
Assets |
FY 2006 |
FY 2005 |
Change |
|---|---|---|---|
|
Cash + ST Invest. |
$16,422 |
$13,929 |
17.9% |
|
Accounts Rec. |
$10,873 |
$9,903 |
9.8% |
|
Inventory |
$7,750 |
$6,877 |
12.7% |
|
Liabilities |
FY 2006 |
FY 2005 |
Change |
|---|---|---|---|
|
Accounts Payable |
$12,102 |
$10,223 |
18.4% |
|
Long-Term Debt |
$2,490 |
$3,392 |
(26.6%) |
Learn the ways of the balance sheet.
Cash Flow Highlights
|
FY 2006 |
FY 2005 |
Change | |
|---|---|---|---|
|
Cash From Ops. |
$11,353 |
$8,028 |
41.4% |
|
Capital Expenditures |
$1,980 |
$1,453 |
36.3% |
|
Free Cash Flow |
$9,373 |
$6,575 |
42.6% |
Find out why Fools always follow the money.
Cash Conversion Checkup
|
FY 2006* |
FY 2005* |
Change* | |
|---|---|---|---|
|
Days in Inventory |
38.4 |
38.3 |
0.1 |
|
Days in Receivables |
41.4 |
42.4 |
(1.0) |
|
Days Payables Outstanding |
58.7 |
53.8 |
4.8 |
|
Cash Conversion Cycle |
21.1 |
26.8 |
(5.7) |
Read up on cash conversion metrics.
Related Companies:
- Nokia (NYSE:NOK)
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- Microsoft (NASDAQ:MSFT)
- Cisco Systems (NASDAQ:CSCO)
- Dell (NASDAQ:DELL)
- Oracle (NASDAQ:ORCL)
Related Foolishness:
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At the time of publication, Fool contributor Anders Bylund had no position in any company mentioned. Fool rules are here.
