HPQ Drops After Earnings. Is it Time To Buy?

Tonight, Hewlett-Packard Co. (HPQ) isn’t making any friends on Wall Street or Main Street. In addition to posting disappointing results for the fiscal second quarter, the computer systems maker announced that it is cutting as many as 16,000 jobs. That’s on top of the 34,000 layoffs the company had already planned!

The company started things off on the wrong foot by accidentally releasing the first page of its quarterly report thirty minutes before market close today. And it didn’t get any better from there. During the second quarter, Hewlett-Packard earned $1.3 billion on $27.3 billion in revenue. Compared with the year ago quarter this represents 18% earnings growth and 1% drop in sales. Adjusted earnings were $0.88 per share, matching analyst estimates, but the company missed the $27.41 billion consensus sales estimate by a hair.

Adding insult to injury, the company cut its earnings outlook for FY 2014. While management had previously forecast earnings of $2.85 to $3.00 per share, it now sees EPS between $2.68 and $2.80. Adjusted earnings are now expected to be between $3.63 and $3.75 per share, in line with the Street view.

HPQ is currently A-rated in Portfolio Grader, but any current shareholders should be advised that this rating will likely change once the latest earnings results are plugged in. The good news is that HPQ shares have been trending upward for the past few months so this may be a good time to consider locking in profits. HPQ goes ex-dividend on June 9, so the stock will likely rise as some folks try to capture the dividend, then immediately pull back on June 9.

The fact is that while HPQ has been turning things around since 2013, there are much better buying opportunities when it comes to computer hardware. In my Blue Chip Growth newsletter I’ve just recommended two chipmakers with very strong forecasted sales and earnings, and I have another tech play that has rallied nearly 40% since November. Current members of Blue Chip Growth can see these recommendations right now on the Buy List.

If you’re not a member of the Blue Chip Growth advisory newsletter and would like to learn more about how to join risk-free, you may get complete details here.


Louis Navellier

Louis Navellier

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