<p>Hewlett Packard Enterprise (NYSE: HPE) reports first quarter 2020 results after March 3. What can we expect to see from the company and what effect can the figures have on the HPE share? If Q4’s results are a clue, it may not be good news for investors.
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The company’s shares have already fallen 16% in the last two weeks thanks to the coronavirus from China and its cooling effect on the markets. A repeat of Q4’s revenue loss could send the company’s shares to levels not seen in four years.
Here’s what you can expect from Hewlett Packard Enterprise after revenue next week.
What happened during Q4?
To get an idea of what to expect when HPE reports its Q1 2020 results, it is worth looking at what happened in November when the company delivered its Q4 2019 results. It was a bloodbath for HPE stocks, to say the least.
The company hit earnings estimates of 46 cents per share and delivered 49 cents per share. But revenue was a $ 7.2 billion miss. Although revenues were described as “stable over the past three quarters”, they decreased by 9% compared to the previous year. It was a result of a global server market that declined for most of 2019.
Hewlett Packard Enterprise dropped it with Dell (NYSE: DELL) for the top spot, but the big drop in revenue scared the market. HPE shares fell 8.5% in one day.
It has gone downhill since then for Hewlett Packard. It slipped another 9% over the next two and a half months. After the coronavirus panic pushed it down further, HPE is now trading at $ 12.58, bringing its value loss over the past 12 months to 23%.
Could it get even worse after Hewlett Packard Enterprise reports its first quarter 2020 revenue on Monday night?
The conclusion for HPE stocks
It was announced in 2014 that the original Hewlett-Packard would be split into two companies, Hewlett Packard Enterprise and HP (NYSE: HPQ). The first would focus on the corporate market, the second on computers and printers. At the time, Professor Ivard of Harvard Business School had this to say about the plan:
HP was Silicon Valley. So began Silicon Valley. It is one of the beautiful, original Silicon Valley stalwarts that somehow winds or breaks up into individual pieces.
Since Hewlett Packard Enterprise began trading in October 2015, its value has increased by 27%. HP has improved and raised its share prices by 66% within the same time frame. InvestorPlace’s Dana Blankenhorn wrote about HPE 2019:
It is undervalued, but it has underperformed for so long that many analysts believe it is hardly worth holding.
These analysts look a little more favorable on HPE these days. While PC sales remain stagnant at best, the market for freight forwarders will grow by 5-6% in 2020, after declining in 2019. Investment analysts surveyed by The Wall Street Journal have made both stocks look like a “hold” in several years months. But with an average 12-month median price target of $ 17.15, they see the HPE stock up 36%. HPQ, on the other hand, sees a more modest 11.6% uptrend.
Hewlett Packard Enterprise Q1 figures are expected to reflect the weakness in the server market that lasted until 2020. The company is expected to more or less repeat its Q4 result – which gives an increase in the result, but with revenues that are lower than the year before. on an annual basis. It can trigger a new sale. In that case, it would be a buying opportunity for HPE shares, especially with the global server market on track to recover by 2020.
At the time of writing, Brad Moon had no position in any of the above securities.