HPE Set to Report Q2 Earnings: Is a Beat in Store for the Stock?

Hewlett Packard Enterprise HPE is scheduled to report second-quarter fiscal 2025 results on June 3.

For the second quarter of fiscal 2025, management expects non-GAAP earnings per share between 28 cents and 34 cents. The consensus mark is pegged at 34 cents per share, indicating a decrease of 19.05% from the prior-year quarter’s reported figure. The estimate has been revised upward by a penny over the past 30 days.

HPE’s earnings beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters, missing the same on one occasion, delivering an average earnings surprise of 5.67%.

For the second quarter of fiscal 2025, HPE expects revenues between $7.2 billion and $7.6 billion. The Zacks Consensus Estimate is pegged at $7.47 billion, suggesting growth of approximately 3.66% from the year-ago quarter’s reported figure. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Hewlett Packard Enterprise Company Price and EPS Surprise

Hewlett Packard Enterprise Company price-eps-surprise | Hewlett Packard Enterprise Company Quote

Factors to Influence HPE’s Q2 Results

Hewlett Packard Enterprise’s fiscal second-quarter performance is expected to have been supported by a recovering demand environment fueled by artificial intelligence (AI). HPE’s AI-driven networking portfolio is likely to have contributed to the growth of its Intelligent Edge services across campus and branch segments.

AI continues to be a key growth catalyst for HPE. During the second quarter, HPE’s AI systems and sovereign AI cloud offerings are likely to have been driven by strong demand from the customers, particularly through HPE Private Cloud AI, which is expected to have boosted the company’s top line.

The increasing adoption of the Aruba Edge Services Platform and HPE GreenLake is expected to have driven Hewlett Packard Enterprise’s revenues in the to-be-reported quarter. The HPE GreenLake solution is likely to have benefited from the company’s effort to simplify its cloud strategy by including all related products in the hybrid cloud segment. This initiative is expected to have simplified the customer adoption of the solution and added to the top line.

Hewlett Packard Enterprise has been benefiting from persistent growth in sales of its accelerator processing unit, primarily driven by rising demand for HPE Cray EX, Cray XT and HPE ProLiant Gen11 AI-optimized servers.

However, softening IT spending is likely to have impacted overall financial performance in the second quarter. Higher interest rates and inflationary pressures are hurting consumer spending. On the other hand, enterprises are postponing their large IT spending plans due to a weakening global economy amid ongoing macroeconomic and geopolitical issues.

Earnings Whispers for HPE

Our proven model predicts an earnings beat for Hewlett Packard Enterprise this earnings season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is the case here.

Earnings ESP : Earnings ESP, which represents the difference between the Most Accurate Estimate (35 cents) and the Zacks Consensus Estimate (34 cents), is +2.94%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank : HPE carries a Zacks Rank #3 at present.

Other Stocks With the Favorable Combination

Per our model, Broadcom AVGO, Ciena CIEN and Vail Resorts MTN also have the right combination of elements to post an earnings beat in their upcoming releases.

Broadcom carries a Zacks Rank #2 and has an Earnings ESP of +1.27%. The company is scheduled to report second-quarter fiscal 2025 results on June 5. Its earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 3.44%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Broadcom’s second-quarter earnings is pinned at $1.57 per share, suggesting an increase of 42.73% from the year-ago quarter. It is estimated to report revenues of $14.92 billion, which suggests an increase of approximately 19.5% from the year-ago quarter.

Ciena has a Zacks Rank #3 and an Earnings ESP of +20.1% at present. Ciena is slated to report the second quarter of fiscal 2025 results on June 5. CIEN’s earnings beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters, missing the same on one occasion, delivering an earnings surprise of 40.14%, on average. 

The Zacks Consensus Estimate for second-quarter earnings is pegged at 52 cents per share, suggesting a whopping increase of 92.59% from the year-ago quarter. Ciena’s quarterly revenues are estimated to increase 20.27% year over year to $1.1 billion.

Veil Resorts carries a Zacks Rank #3 and has an Earnings ESP of +1.87%. The company is scheduled to report third-quarter fiscal 2025 results on June 5. Its earnings surpassed the Zacks Consensus Estimate twice in the trailing four quarters, while missing the same on two occasions, the average surprise being 0.37%.

The Zacks Consensus Estimate for MTN’s third-quarter earnings is pegged at $10 per share, indicating a year-over-year increase of 4.82%. The consensus mark for revenues is pegged at $1.3 billion, suggesting a year-over-year rise of 1.51%.

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This article originally published on Zacks Investment Research (zacks.com).

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