Hewlett-Packard Co. (NYSE: HPQ) is set to report its third-quarter earnings on Wednesday afternoon after the market closes. While there are many issues around earnings expectations, Meg Whitman’s turnaround plan is still likely to remain in focus.

The PC-maker and IT services giant has estimates from Thomson Reuters of $0.89 in earnings per share (EPS) and $27 billion in revenues. This compares to $0.86 EPS and would be almost a 1% revenue drop versus a year ago. HP’s guidance was $0.86 to $0.90 in adjusted EPS, excluding after-tax costs of about $0.27 per share, related primarily to the amortization of intangible assets and restructuring charges.

The Thomson Reuters estimates for the following quarter are $1.05 EPS and $28.6 billion in revenues. Estimates compare to $1.01 EPS and a drop in revenue of almost 2% versus the same quarter a year earlier.

What investors need to know is that with shares back at $35 the stock has recovered much of its losses from when shares dipped to under $15. It is also back up to the mid-2011 levels where the stock was trading before the problems started to get really bad here. Again, the earnings report will just be the tip of the iceberg. It is the turnaround that most investors will be watching closest. Here are several issues to consider:

• Last quarter, HP generated $3 billion in cash flow from operations, down 16% from a year earlier.
• Last quarter, HP used $831 million of cash to repurchase approximately 26.7 million shares of common stock in the open market.
• Last quarter, HP exited the quarter with $15.4 billion in gross cash.
• The most recent round of layoffs probably did not do wonders for morale inside of Hewlett-Packard.
• Deutsche Bank recently named it a top tech stock for the rest of 2014.
• HP’s effort into 3D printing has been lowered on expectations.
• Another big deal will be whether the strong business recovery from Intel in processors means that PC sales were better than expected or not.
• HP was recently raised to Buy from Neutral by the small firm Monness Crespi & Hardt.
• Goldman Sachs finally removed its Sell rating in June, only to a Neutral rating, and the target was raised to $32 from $25 (with shares already at $33.25 at the time.
• The turnaround continues under Meg Whitman.
• To show just how low expectations are, HP trades at only about nine times next year’s earnings estimates.

At $35.50, HP’s 52-week range is $20.25 to $36.21. The stock’s consensus price target from analysts is almost $37, with the highest estimate up at about $43 on last look.

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