What to look for when Hewlett Packard (HPE) reports Q4 2024 results

Information technology company Hewlett Packard Enterprise (NYSE: HPE) is actively innovating its product portfolio to better align with the AI-driven transformation currently sweeping the industry. In recent quarters, the company’s top line and profitability have benefited from widespread AI system conversion.

The performance of the stock has been mixed ahead of the upcoming earnings. After experiencing significant fluctuations in the past six months, the shares hit a new high this week. Meanwhile, valuation and competition challenges related to Hewlett Packard’s acquisition of Juniper Networks can be a dampener for investors. The deal is yet to be cleared by the US Justice Department, which is expected to challenge it if required.

Estimates

When the tech firm reports fourth-quarter results next week, the market will be looking for adjusted earnings of $0.56 per share, vs. $0.52 per share in the year-ago quarter. That is above the mid-point of the management’s EPS forecast of $0.52-57. It is estimated that October-quarter revenue increased 12.4% year-over-year to $8.26 billion. The company is expected to release the report on Thursday, December 5, at 4:05 pm ET.

Hewlett Packard’s CEO Antonio Neri said at the Q3 earnings call, “We are excited to significantly expand our networking business with the pending acquisition of Juniper Networks. The acquisition of this high-margin business will accelerate our edge-to-cloud vision with a full networking IP stack: from silicon to infrastructure, to the operating system, to security, to software and services, in a cloud-native and AI-driven approach. We expect our compelling value proposition will begin to deliver returns to our shareholders in the year post-close.”

In recent years, the company made good progress in delivering on its edge-to-cloud strategy. While customers, in general, remain cautious about tech spending amid the dynamic macro environment, the recent recovery in enterprise demand in North America bodes well for the business. The company looks well-positioned to meet customer needs across AI, hybrid cloud, and networking.

Networking in Focus

The acquisition of Juniper Networks, which is expected to close by year-end, complements Hewlett Packard’s strategy of expanding its footprint in the network space. The combination will drive long-term revenue growth and enhance margin performance while accelerating AI-driven innovation.

In the July quarter, revenues rose 10% annually to $7.7 billion and topped expectations, as a double-digit dip in Intelligent Edge revenue was more than offset by a 35% surge in the core Server revenue. Consequently, Q3 profit moved up 2% year-over-year to $0.50 per share, exceeding analysts’ forecast. On a reported basis, net income was $512 million or $0.38 per share in the third quarter, compared to $464 million or $0.35 per share in the same period of 2023.

Guidance

Meanwhile, Hewlett-Packard executives increased their adjusted earnings guidance for fiscal 2024 to the range of $1.92 per share to $1.97 per share, encouraged by the strong performance so far this year. The guidance for full-year unadjusted EPS has been raised to $1.68-1.73.

Reversing a part of the recent gains, shares of Hewlett Packard traded lower during Wednesday’s regular session. The stock has gained about 22% so far this year.