Shares of Hewlett Packard Enterprise (HPE) sank 1.9% during the extended trading session on November 30, after the company delivered mixed fourth-quarter results. Despite a strong demand for its offerings, the company’s revenue missed expectations while earnings topped estimates.
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The company also guided for the first quarter and full-year fiscal 2022, which fell in line with the Street’s estimates.
HPE is a global enterprise information technology company, and its shares have gained 28.1% over the past year.
Mixed Results
HPE posted earnings of $0.52 per share, up 26.8% compared to the prior-year quarter, and 3 cents better than analysts’ estimates of $0.49 per share.
Moreover, net revenue rose 2% year-over-year to $7.35 billion, yet was marginally lower than the analyst estimates of $7.39 billion.
Compared to the year-ago period, HPE’s annualized revenue run-rate (ARR) grew 36% to $796 million and total as-a-Service orders jumped 114%.
For the full year fiscal 2021, HPE’s earnings increased 27.3% annually to $1.96 per share and net revenue rose 3% annually to $27.78 billion.
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Management Comments
President and CEO of HPE, Antonio Neri, said, “In 2021, we accelerated our pivot to as a service, strengthened our core capabilities, and invested in bold innovation in high-growth segments.”
Neri added, “As our customers continue to demand greater connectivity, access to solutions that allow them to extract value from their data no matter where it lives, and a cloud-everywhere experience, HPE is poised to accelerate our market leadership and provide strong shareholder returns.”
Outlook
Based on strong demand and continued business momentum, HPE expects Q1FY22 earnings outlook to fall in the range of $0.42 per share to $0.50 per share, against the consensus estimate of $0.49 per share.
Additionally, full-year fiscal 2022 earnings are projected to be between $1.96 per share to $2.10 per share, against the consensus estimate of $2.03 per share.
Analysts’ View
Responding to HPE’s Q4 performance, Susquehanna analyst Mehdi Hosseini, said, “HPE had somewhat mixed results for the October quarter, with some business segments coming in above expectation, while others were in line or below… Management expects the supply chain constraints to last until at least 2H22. The backlog remains strong for HPE, although much of this backlog is due to a lack of customer acceptances.”
Hosseini reiterated a Hold rating on the stock with a price target of $15, which implies 4.5% upside potential to current levels.
Overall, the stock has a Moderate Buy consensus rating based on 6 Buys, 2 Holds, and 1 Sell. The average Hewlett Packard Enterprise price target of $18 implies 25.4% upside potential to current levels.
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