Technology company Hewlett Packard Enterprise (HPE) is set to report its Q1 earnings results on March 6 after the market closes. Analysts are expecting earnings per share to come in at $0.50 on revenue of $7.81 billion. This equates to a 4.2% increase in EPS and a 16.05% increase in revenue on a year-over-year basis.
Although it is nice to see revenue grow in the double digits, ideally, investors should want to see earnings per share grow faster than revenue, as this demonstrates a high degree of operating and financial leverage in the business. Nevertheless, it’s worth noting that HPE has beaten earnings estimates for 10 consecutive quarters. Therefore, it is possible that EPS growth can still outpace sales growth.
Investors will also be closely watching for any commentary from HPE’s management regarding the potential impact of tariffs and trade policies on the company’s supply chain and profitability. Investors will want to hear how the company plans to manage these risks, whether it be through supply chain diversification or potential price adjustments.
What Do Options Traders Anticipate?
Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don’t worry, the Options tool does this for you. Indeed, it currently says that options traders are expecting an 8.3% move in either direction.
Is HPE Stock a Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on HPE stock based on six Buys, four Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. After a 4% increase in its share price over the past year, the average HPE price target of $24.60 per share implies 29.75% upside potential.
