Tech Giant HPE Tumbles 15% Following Q1 Report
Hewlett Packard Enterprise (HPE, Financial) stock plunged 16% on Friday morning trading following a mixed Q1 2025 earnings report. The enterprise IT specialist, distinct from its better-known sibling HP (HPQ, Financial), posted revenue of $7.85 billion, slightly above forecasts of just over $7.8 billion, but earnings per share fell to $0.49, a penny below the $0.50 consensus.
- Warning! GuruFocus has detected 4 Warning Sign with HPE.
Despite a 17% year-on-year revenue growth and robust performance in artificial intelligence, with net orders reaching $1.6 billion and enterprise AI orders up 40%, weak margins fueled the sell-off. Gross margins dropped 720 basis points to 29.2% from 31.8%, and although GAAP earnings surged 52%, GAAP profit lagged at $0.44 compared to non-GAAP estimates.
In fact, the company earned negative free cash flow of $877 million, which is not even close to in line with sustainable earnings quality. The disappointing guidance for 2025 has prompted investors to rework their view on this key Enterprise IT provider.
This article first appeared on GuruFocus.Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
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