Earnings Previews: Hewlett Packard Enterprise, Pure Storage, UiPath

The three major U.S. equity indexes closed higher Friday. The Nasdaq jumped 3.3%, the S&P 500 rose 2.5% and the Dow Jones industrials were up 1.8%. Friday’s report on personal consumption bolstered hope that U.S. inflation may have reached its peak. Tech and consumer cyclical stocks both added 3.4% to lead all 11 sectors. This week’s big economic report comes Friday, when the report on May payrolls is released. Economists currently expect the economy to have added about 325,000 in the month, down from 428,000 in April.

Before markets opened Tuesday morning, KE Holdings beat top-line and bottom-line estimates but issued downside guidance for the current quarter. An announced $1 billion share buyback program, still to be approved by shareholders, carried the day. The stock traded up 7% in Tuesday’s premarket session.

After markets close Tuesday afternoon, ChargePoint, HP, Nordic American Tankers and Salesforce will be reporting quarterly results. Specialty retailers Chewy and GameStop will take their turns in the earnings spotlight on Wednesday.

Here is a look at three tech companies on deck to report quarterly results after markets close Wednesday.

Hewlett Packard Enterprise

Enterprise-level hardware and software maker Hewlett Packard Enterprise Co. (NYSE: HPE) has added less than 1% to its share price over the past 12 months. From a low in late September, the stock peaked in late March with a share price gain of about 11.5% for the period. The company’s free cash flow through the end of its first quarter of fiscal 2022, which ended in January, totaled $2.2 billion ($1.71 per share), and the payout ratio to shareholders was 16.8%. It has not raised its dividend in more than two years. HPE has to do better than that.

Analyst sentiment leans bullish on the stock, with 12 of 23 brokerages having a Buy or Strong Buy rating. Another eight have Holds. At a recent share price of around $15.80, the upside potential based on a median price target of $18.00 is 13.9%. At the high target of $21, the upside potential is about 32.9%.

For the company’s second quarter of fiscal 2022, analysts expect to see revenue of $6.96 billion, which would be down 2.3% sequentially but up 1.9% year over year. Adjusted earnings per share (EPS) are forecast at $0.45, down 14.7% sequentially and a penny below the year-ago number. For the full fiscal year ending in October, analysts are looking for adjusted EPS of $2.09, up 6.4%, on sales of $28.57 billion, up 2.8%.

HPE stock trades at 7.6 times expected 2022 EPS, 7.2 times estimated 2023 earnings of $2.20 and 6.8 times estimated 2024 earnings of $2.32 per share. The stock’s 52-week trading range is $12.99 to $17.76, and the company pays an annual dividend of $0.48. Total shareholder return over the past year is negative 0.3%.

Pure Storage

Shares of storage technology firm Pure Storage Inc. (NYSE: PSTG) reached an all-time high in late March and then dropped 32% to close the past 12 months with a share price gain of about 27%. As with fellow enterprise-oriented peer HPE, analysts are concerned that less spending by Pure Storage’s customers coupled with an uncertain macroeconomy will combine to hurt sales. The company’s own outlook for quarterly sales is a bit below analysts’ expectations. Not a good sign.

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