Dell (DELL) reports fiscal Q4 results tonight, after the bell, and Hewlett-Packard (HPQ) reports fiscal Q1 results tomorrow evening, and analysts are sharpening up their models for both.
For the fiscal Q4 ended in January, the Street is estimating Dell made $15.96 billion in revenue and 52 cents per share in net profit. HP is estimated to have made $30.75 billion in revenue and 87 cents per share in the three months ended in January.
Dell’s own forecast back in late November was for the company’s full-year revenue growth to be toward the lower end of a range of 1% to 5% that�it had previously offered. With revenue last year of $61.5 billion, that implies at least $62.12 billion, which is ahead of the full-year Street consensus of $62 billion, implying upside in this final quarter.
HP’s forecast on November 21st was below analysts’ estimates at the time, projecting a range of 83 cents to 86 cents in profit per share this quarter.
The company didn’t offer a revenue outlook, saying its new practice is to offer only EPS projections. Newly installed CEO Meg Whitman has said the company expects to make “at least $4″ per share in profit this fiscal year. Analysts are currently modeling $4.09. Analysts expect the company will stick with the EPS-only approach to its “guidance” when it reports tomorrow.
For the current quarter, the Street is modeling Dell to deliver $15.1 billion and 46 cents, and for HP to deliver $30.42 billion and 95 cents a share.
UBS’s Maynard Um this morning reiterated a Neutral rating on HP shares, but he raised his price target to $30 from $26.50, writing that the stock’s P/E multiple is “normalizing,” and he assigns a 7 times P/E on his 2012 estimate for $4.15 per share in profit.
HP will likely turn in 87 cents a share, though there were several challenges in the January quarter, including disk-drive shortages that constrained personal computer shipments for the Personal Systems Group, and some pressure on printer sales, if the recent results from Lexmark and Canon are any indication.
Sterne Agee’s Shaw Wu, on the other hand, reiterates a Buy rating on HP shares, and a $34 price target, writing that the company may beat the 86 cents at the high end of its forest, even though “our supply chain checks indicate mixed trends.”
The company is regaining credibility with customers and fixing inventory issues in its PC (31% of revenue) and printer (20%) businesses. In terms of end markets, we are picking up relative strength in enterprise and SMB markets (65%- 70% of revenue) offsetting weakness in consumer (~25%).
Wu is formally modeling $30.97 billion and 86 cents a share.
Wu expects the company may forecast 95 cents a share for this quarter.
BMO Capital’s Keith Bachman reiterates a Market Peform rating on shares of both HP and Dell, though he raised his price target on Dell stock to $21.50 from $16 after increasing the P/E multiple he uses to 9 times from 8 times.
Bachman’s estimate for Dell this fiscal year goes to $2.18 from $2.05, with a projection for $2.38 in 2014.
Margins may hold up better this year than expected, he thinks, given that the company’s achieving a better mix of product than in past, even while component pricing remains a challenge for the company.
He’s modeling 22.8% gross profit margin this year, down from 23.1% last year.
HP will probably miss consensus revenue estimates but beat on the bottom line, he thinks, delivering perhaps $30.56 billion in revenue and 91 cents in EPS.
But Bachman thinks HP could trade relatively better this year, writing “we are interested in potentially moving to a bullish view given valuation,” although, “We think HPQ is probably a two-year turnaround, if not longer.”
HP shares today are down 5 cents at $29.54, while shares of Dell are up 6 cents at $18.22.
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