HPE to Post Q4 Earnings: Time to Buy, Sell or Hold the Stock?

Core Insights - Hewlett Packard Enterprise (HPE) is set to report its fourth-quarter fiscal 2025 results on December 4, 2025, with anticipated revenues between $9.7 billion and $10.1 billion, reflecting a year-over-year growth of approximately 17.8% [1] - The expected non-GAAP earnings per share (EPS) for the fourth quarter is projected to be between 56 and 60 cents, with the Zacks Consensus Estimate at 59 cents, indicating a 1.72% increase year over year [2] Revenue and Earnings Expectations - HPE's revenue forecast for Q4 fiscal 2025 is between $9.7 billion and $10.1 billion, with a consensus estimate of $9.96 billion [1] - The expected EPS range for the fourth quarter is 56-60 cents, with a consensus estimate of 59 cents [2] - HPE's earnings have surpassed consensus estimates in three of the last four quarters, with an average surprise of 4.4% [3] Factors Influencing Performance - A decline in AI Systems revenues is anticipated due to a large deal shipped in Q3 fiscal 2025, alongside higher costs from AI rack deployments and integration expenses from Juniper Networks [5][7] - The cash conversion cycle has increased by nine days due to the inclusion of Juniper Networks, which may negatively impact HPE's financial performance [6] - Enterprises are delaying large IT spending plans due to macroeconomic issues, which could affect HPE's top line [6][7] Growth Areas - HPE's Intelligent Edge services are expected to grow, driven by the recovery in the networking market and the adoption of Wi-Fi 7 [8] - The adoption of the Aruba Edge Services Platform and HPE GreenLake is likely to contribute positively to revenues [9] - HPE's cloud business is benefiting from the shipment of over 5,000 Alletra MP arrays in 2025, with a total of 44,000 customers for its GreenLake cloud [13] Competitive Landscape - HPE faces competition from major players like Amazon and Microsoft in the cloud space, and from Dell Technologies in the server market [16][17] - HPE's stock trades at a discounted forward price-to-sales (P/S) multiple of 0.7X compared to the industry's 4.46X [11] Challenges - HPE's leverage increased to 3.1x after acquiring Juniper Networks, raising interest expenses and limiting capital returns [14] - Networking margins have reset to the low 20% range, and AI systems' profitability is constrained by high engineering and ramp costs [15] - The postponement of shipping in Q3 fiscal 2025 and a higher mix of lower-margin AI systems pose near-term challenges [18]