On Nov. 16, computing and services giant Hewlett-Packard
- That net earnings boost sure looks good, until you remove one-time restructuring charges from both periods. In Q4 2005, that was a whopping $1.57 billion item versus just $152 million this time. Backing those amounts out, HP's earnings actually shrank by 6.7%, and net margins decreased by 1.1 percentage points. Funny what an easy comparison can do for you.
- There's no doubt about the company's real earnings power, however, judging by strong free cash flow, a growing bank account, and shrinking debt.
- Cash management left little to be desired, too, apart from a slight pop in inventories. But HP is delaying its own payments longer than it allows customers to delay theirs, and that divergence is growing, so it's all good.
- Check out the numbers for the full fiscal year.
(Figures in millions, except per-share and cash-management data)
Income Statement Highlights
|
Avg. Est. |
Q4 2006 |
Q4 2005 |
Change |
|
|---|---|---|---|---|
|
Sales |
$24,100 |
$24,555 |
$22,913 |
7.2% |
|
Net Profit |
-- |
$1,697 |
$416 |
307.9% |
|
EPS |
$0.61 |
$0.60 |
$0.14 |
328.6% |
|
Diluted Shares |
-- |
2,816 |
2,908 |
(3.2%) |
Get back to basics with a look at the income statement.
Margin Checkup
|
Q4 2006 |
Q4 2005 |
Change* |
|
|---|---|---|---|
|
Gross Margin |
24.28% |
23.48% |
0.80 |
|
Operating Margin |
7.74% |
1.01% |
6.73 |
|
Net Margin |
6.91% |
1.82% |
5.09 |
Margins are the earnings engine. See how they work.
Balance Sheet Highlights
Assets | Q4 2006 | Q4 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 | Q4 2006 | Q4 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
Q4 2006 | Q4 2005 | Change | |
|---|---|---|---|
Cash From Ops. | $3,244 | $1,886 | 72.0% |
Capital Expenditures | $868 | $446 | 94.6% |
Free Cash Flow | $2,376 | $1,440 | 65.0% |
Find out why Fools always follow the money.
Cash Management Checkup
Q4 2006* | Q4 2005* | Change* | |
|---|---|---|---|
Days in Inventory | 36.8 | 34.7 | 2.1 |
Days in Receivables | 37.6 | 36.7 | 0.9 |
Days Payables Outstanding | 55.2 | 50.3 | 4.9 |
Cash Conversion Cycle | 19.2 | 21.1 | (1.8) |
Read up on cash conversion metrics.
Related Companies:
- Apple
(NASDAQ:AAPL) - Dell
(NASDAQ:DELL) - Gateway
(NYSE:GTW) - IBM
(NYSE:IBM) - Sun Microsystems
(NASDAQ:SUNW) - Xerox
(NYSE:XRX)
Related Foolishness:
- Foolish Forecast: Hewlett-Packard, Ho!
- Hypocrisy at Hewlett-Packard
- Hewlett-Packard Detects a New Market
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At the time of publication, Fool contributorAnders Bylund had no position in any company mentioned. Fool rules are here.
