Why Hewlett-Packard Shares Popped
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of beaten-down tech leader Hewlett-Packard have posted one of their largest gains in recent memory following a positive earnings report. Shares are up roughly 9% as of this writing.
So what: HP's fiscal first quarter came in with $28.4 billion in revenue and earnings of $0.82 per share. Although revenue was 6% lower than the year-ago quarter, it still handily beat Wall Street's lowball consensus of $27.8 billion. The $0.71 EPS consensus was soundly thrashed.
Looking ahead, HP now expects EPS in the $0.80 to $0.82 range for the second quarter and $3.40 to $3.60 for the full year. Both guidance ranges come in ahead of Wall Street's estimates, which sought $0.77 for the second quarter and $3.33 for the year.
Now what: The upper bound of HP's EPS guidance would bring the company roughly back to where it was after the awful year that was 2012, with its write-offs and writedowns and botched turnarounds and so forth. However, virtually every segment saw revenue decline year over year, with HP's financial services group the only one to show a top-line gain. A forward P/E of just 4.7 means that HP is undeniably cheap, and the stock offers a reasonable dividend as well. Gains from this point on may be driven more by a return to valuation means than by any fundamental improvements in HP's increasingly dated-looking business.
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The article Why Hewlett-Packard Shares Popped originally appeared on Fool.com.Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more insight into markets, history, and technology.The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.