H-P Earnings and Guidance Still Sells Investors on the Value Case

Before you go, we thought you'd like these...
Before you go close icon

HP LogoHewlett-Packard Co. (NYSE: HPQ) is out with its anticipated earnings report. The PC-maker and IT-services provider was up going into the close on hopes of a breakup or a buyout in the works. After Dell Inc. (NASDAQ: DELL) has become the subject of a management led buyout by founding CEO Michael Dell, there has been hope that perhaps H-P would revisit its previous breakup or would move to unlock value.

Earnings were reported at $0.82 per share on a comparable basis, which is down 11% from the prior year but is still above its previously provided outlook of $0.68 to $0.71 per share. Its first quarter net revenue fell 6% down to $28.4 billion, but this would be down 4% when adjusted for the effects of currency. Thomson Reuters had estimates of $0.71 EPS and $27.8 billion in revenue. H-P's cash flow from operations was $2.6 billion, but its non-GAAP operating margin fell to 7.9% from 8.6% a year ago.

For the second quarter of fiscal 2013, HP sees $0.80 to $0.82 in non-GAAP earnings per share excluding after-tax costs of approximately $0.42 per share. The Thomson Reuters consensus is $0.77 per share.

For the full year fiscal 2013, it sees non-GAAP earnings of $3.40 to $3.60 per share excluding after-tax costs of approximately $1.10 per share. The consensus is $3.32.

H-P shares closed up 2.4% at $17.10 on the day and shares are now up about 4.2% at $17.87 after the close. If you take a straight-line to its earnings forecast and maintain it indefinitely after this coming year based upon the closing bell price, HP trades at a mere 4.9-times forward earnings.

H-P shares have not traded above $18 since last September. The argument remains ongoing whether HP is a true value stock or a real value trap.

Filed under: 24/7 Wall St. Wire, Earnings, PC Companies, Technology, Technology Companies, Value Investing Tagged: DELL, featured, HPQ
Read Full Story

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

People are Reading