Technology

Earnings Previews: Hewlett Packard Enterprise, Salesforce.com

The number of earnings reports due for release over the next several weeks is going to drop way down. That does not mean, however, that there aren’t a few each week that deserve some attention.

Monday morning, Chinese electric maker Li Auto beat consensus estimates on both the top and bottom lines and the stock was up about 10% shortly after the opening bell. We have previewed the company’s report, along with three other firms reporting results before markets open on Tuesday: Chico’s FAS, Hello Group and JinkoSolar.

Later this week we’ll have reports from a chipmaker, some growth-oriented enterprise software companies and a supermarket chain. Here are two big players set to release quarterly results after markets close on Tuesday.

Hewlett Packard Enterprise

Enterprise-level hardware and software maker Hewlett Packard Enterprise Co. (NYSE: HPE) has added nearly 35% to its share price over the past 12 months. Virtually all the growth was achieved by mid-May and the period since then has been somewhat bumpy. The stock hit a trough earlier this month when a downgrade to Sell shaved about 8% from the share price. Shares haven’t yet recovered, despite the company’s significant dividend. Dell’s report last week gave the shares a boost, but it didn’t last.

Analyst sentiment is mixed on the stock, with 10 of 24 brokerages giving the shares a Hold rating and 12 with a Buy or Strong Buy rating on the stock. At a recent price of around $14.60 a share, the upside potential based on a median price target of $18.00 is 23%. At the high target of $21, the upside potential is about 44%.

The revenue estimate for the company’s fourth quarter of fiscal 2022 (ended in October) is $7.37 billion, which would be up 6.9% sequentially and 2.2% higher year over year. Adjusted earnings per share (EPS) are forecast at $0.49, up 4.1% sequentially and up 32.4% year over year. For the full fiscal year, analysts are looking for EPS of $1.93, up 43%, on sales of $27.8 billion, up 3%.

Based on the 2021 EPS estimate, the multiple to its share price is 7.6. For 2022, the price multiple is 7.2, based on an EPS estimate of $2.03 and, for 2023, it is 6.8, based on EPS of $2.14. The stock’s 52-week range is $10.94 to $16.74. The company pays a dividend of $0.48 (yield of 3.33%). Total shareholder return for the past year is 34.4%.

Salesforce.com

Shares of enterprise software maker Salesforce.com Inc. (NYSE: CRM) spent nine of the past 12 months trading lower than where it had begun the period. After mid-August, the shares added more than 25%, before pulling back to post a 12-month gain of around 17%.

The company soared past the previous quarter’s estimates for both EPS and revenue and has raised expectations for the third quarter of fiscal 2022, which ended in October. Quarterly results will include around $1 billion in revenue from Slack for the entire quarter. Investors likely will put more emphasis on profits, however.

Of 49 analysts covering the Dow Jones industrial average component, 42 have a Buy or Strong Buy rating on the stock. The other seven rate the shares at Hold. At a share price of around $291.70, the upside potential based on a median price target of $328 is 12.4%. At the high price target of $385, the upside potential is 32%.

The consensus revenue estimate for the third quarter is $6.8 billion, up 7.3% sequentially and 25.4% year over year. Adjusted EPS are forecast at $0.92, down 38% sequentially and 47% year over year. For full fiscal 2022, ending in January, current estimates call for EPS of $4.42, down 10%, on sales of $26.34 billion, up 24%.

Based on the 2022 EPS estimate, the multiple to the company’s share price is 66.0. For 2023, the price multiple is 63.1, based on an EPS estimate of $4.63 and, for 2023, it is 6.8, based on EPS of $5.58. The stock’s 52-week range is $201.51 to $311.75. Salesforce.com does not pay a dividend. Total shareholder return for the past year is 17.6%.