Hewlett Packard Enterprise Clears Low Bar for Q3

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Hewlett Packard Enterprise Co. (NYSE: HPE) released  fiscal third-quarter financial results after markets closed Tuesday. The company said that it had $0.30 in earnings per share (EPS) and $8.2 billion in revenue, compared with consensus estimates from Thomson Reuters that called for $0.26 in EPS and $7.49 billion in revenue. The same period from last year had $0.49 in EPS and $12.21 billion in revenue.

The company reported its segments as:

  • Enterprise Group revenue was $6.8 billion, up 3% year over year, up 3% when adjusted for currency, with a 9.3% operating margin.
  • Software revenue was $718 million, down 3% year over year, down 2% when adjusted for divestitures and currency, with a 24.9% operating margin.
  • Financial Services revenue was $897 million, up 10% year over year, net portfolio assets were up 2%, and financing volume was down 8%.

In terms of the outlook for the fiscal fourth quarter, HPE expects to see EPS in the range of $0.26 to $0.30. There are consensus estimates calling for $0.40 in EPS and $7.8 billion in revenue for the coming quarter.

On the books, cash and cash equivalents totaled $7.76 billion at the end of the quarter compared with $12.99 billion at the end of the previous fiscal year.

Meg Whitman, CEO, commented:

The results of the third quarter are an encouraging sign of the progress we are making. With better execution we drove overall revenue growth, exceeded our EPS targets and improved our operating margins sequentially, all while completing the spin-merge of our Software business. There’s more work to do, but we are on the right track.

Shares of HPE closed Tuesday at $14.40, with a consensus analyst price target of $18.95 and a 52-week range of $11.99 to $14.86. Following the release of the earnings report, the stock was initially up 1% at $14.55 in the after-hours trading session.