Why Should You Hold Hewlett Packard Stock in Your Portfolio?

Shares of Hewlett Packard Enterprise HPE have returned approximately 2.4% year to date against the industry’s decline of 17.5% and the S&P 500 index’s slip of 1.6%.

Notably, Hewlett Packard Enterprise recorded average positive surprise of 19.49% in the trailing four reported quarters. The company has an expected long-term EPS growth rate of 11%.

Let’s delve deeper and analyze the stock’s prospects.

Growth Drivers

Hewlett Packard Enterprise delivered fourth-quarter fiscal 2018 non-GAAP net earnings of 45 cents per share, which beat the Zacks Consensus Estimate of 43 cents. The figure also soared 55% on a year-over-year basis.

Management noted that the bottom line was driven by the company’s strong operational performance, favorable one-time benefits in other income and expenses plus a lower-than-expected tax rate.

Hewlett Packard Enterprise reported revenues from continuing operations of $7.946 billion, up 4% year over year. Further, the quarterly top line outpaced the Zacks Consensus Estimate of $7.854 billion. This upside was aided by solid growth in Hybrid IT and Intelligent Edge segment. Adjusted for currency-exchange rates, the company’s revenues from continuing operations increased 3% year over year.

Coming to Hybrid IT Products, a strong momentum across public and private sector deployments is a key driver. Management noted that growth in high performance compute business is boosted by the big data analytics and specific segments like government, oil and gas, weather and academia.

Growth in Storage revenues is also driven by an increasing customer adoption of the intelligent storage offerings embedded with the company’s AI-based predictive analytics InfoSight platform and improvement in the go-to-market execution.

Strong growth across all product lines of the company including Campus Switching, Wireless LAN and Edge Compute is driving its Intelligent Edge segment.

The company’s strategy to boost its Intelligent Edge and Hybrid IT segment makes us feel optimistic about the stock. Moreover, focus on enhancing its service business is a tailwind. Additionally, cost-saving initiatives, expansion in the operating margin and a solid capital return strategy bode well for the company.

Hewlett Packard Enterprise Company Price and Consensus

Hewlett Packard Enterprise Company Price and Consensus | Hewlett Packard Enterprise Company Quote

Bottom Line

We believe, the upbeat performance will continue in the quarters ahead, providing investors enough reasons to retain the stock.

Zacks Rank & Stocks to Consider

Hewlett Packard Enterprise currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Computer and Technology sector are CACI International CACI, Intel INTC and Symantec Corporation SYMC, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for CACI, Intel and Symantec is projected at 10%, 8.42% and 7.9%, respectively.

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