Hewlett Packard Enterprise Wins Big on Earnings and Outlook

By Chris Lange Updated Jan 13, 12:23PM EST · Published Mar 4, 9:05AM EST

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Hewlett Packard Enterprise Wins Big on Earnings and Outlook — © courtesy of Hewlett Packard Enterprise

Hewlett Packard Enterprise Co. (NYSE: HPE) reported its fiscal first-quarter financial results after the markets closed on Thursday. The company said it had $0.41 in earnings per share (EPS) on $12.7 billion in revenue, which compares to consensus estimates of $0.40 in EPS on revenue of $12.68 billion. The same period of last year had EPS of $0.44 and $13.1 billion in revenue.

In terms of the outlook, the company expects EPS to be in the range of $0.39 to $0.43 for the fiscal second quarter and for EPS to be in the range of $1.85 to $1.95 for fiscal 2016. The consensus estimates call for EPS of $0.42 and $1.87 in the fiscal second quarter and full year, respectively.

During this quarter, the company returned roughly $1.3 billion to shareholders in the form of share repurchases and dividends. However, the company is taking a more ambitious stance going forward as it plans to return all of its free cash flow to shareholders in the coming year.

Tim Stonesifer, chief financial officer of Hewlett Packard Enterprise, said:

After returning $1.3 billion in capital to our shareholders, HPE is increasing our commitment to return at least 100% of our free cash flow outlook to shareholders in fiscal 2016. In addition, when the Tsinghua transaction closes, we plan to use the majority of roughly $2 billion received to repurchase shares.

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The first quarter segment results came in as:

Enterprise Group revenue was $7.1 billion, up 1% year over year, up 7% in constant currency, with a 13.4% operating margin.
Enterprise Services revenue was $4.7 billion, down 6% year over year, flat in constant currency, with a 5.1% operating margin.
Software revenue was $780 million, down 10% year over year, down 6% in constant currency, with a 17.4% operating margin.
Financial services revenue was $776 million, down 3% year over year, up 3% in constant currency, net portfolio assets were up 4%, up 9% in constant currency, and financing volume was down 4%, up 3% in constant currency. The business delivered an operating margin of 129%.

Meg Whitman, president and CEO, commented on earnings:

During our first quarter as an independent company we saw the progress that comes from being more focused and nimble. We delivered a third consecutive quarter of year-over-year constant currency revenue growth, and excluding the impact of recent M&A activity, we saw revenue growth in constant currency across every business segment for the first time since 2010.

On the books, cash and cash equivalents totaled $8.51 billion at the end of the quarter, compared to $9.84 billion at the end of the previous quarter.

Shares of Hewlett Packard Enterprise closed Thursday down 2.2% at $13.60, with a consensus analyst price target of $16.07 and a 52-week trading range of $11.63 to $18.50. Following the release of the earnings report, the stock was up nearly 10% at $14.90 in early trading indications Friday.

About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.