As we head into the final month of the second quarter of CY 2021, a few technology companies are going to report their quarterly earnings this week. This is because companies follow different accounting periods and their fiscal year can very well be different from a calendar year.
According to the earnings calendar, tech companies such as Hewlett Packard Enterprise (NYSE: HPE), NetApp (NASDAQ: NTAP), and Broadcom (NASDAQ: AVGO) are expected to report quarterly earnings this week. All these stocks are part of the S&P 500 (AMEX: SPY) index and let’s see what Wall Street expects from each of them.
Hewlett Packard Enterprise
Hewlett Packard Enterprise will be reporting its results on June 1 for the quarter ended in April. The company is involved in the sales of HPC (high-performance computing), storage as well as edge computing hardware and software solutions. In fiscal 2020, HPE saw its revenue fall by 7% while its earnings decline was wider at 24% year over year.
As the COVID-19 pandemic weighed heavily on businesses, HPE was hurt by lower enterprise spending and related headwinds. Analysts expect HPE to increase sales by 5.2% to $6.62 billion while earnings per share are forecast to almost double to $0.42 in the fiscal Q2 of 2021. During its last earnings call, HPE increased its free-cash-flow forecast to $1.4 billion, up from $1.1 billion in 2021. In fiscal 2020, its free cash flow stood at just $560 million.
HPE stock is trading at a forward price to earnings multiple of 8.7x which is really attractive given its profit margins are forecast to rise at an annual rate of 12.5% in the next five years. Add in its dividend yield of 3% and HPE may end up on the buying list of income and value investors.
NetApp
NetApp will report its fiscal Q4 of 2021 results on June 2. A company valued at a market cap of $17.22 billion, NetApp provides data management solutions that simplify the process of storing enterprise data.
In Q4, analysts expect NetApp to report sales of $1.5 billion, a year-over-year growth of 7%. Comparatively, earnings are forecast to decline by 5% to $1.12 per share. For fiscal 2021, Wall Street expects NetApp to increase sales by 5% to $5.7 billion while earnings might fall by 1% to $4.01 per share.
During the last earnings call, NetApp had forecast sales between $1.44 billion and $1.54 billion while earnings were estimated between $1.06 and $1.14 per share. Investors should note that the company has beaten analyst estimates in each of the last four quarters.
Broadcom
Semiconductor giant Broadcom will report its fiscal Q2 of 2021 results on June 3. A company that is valued at a market cap of $192 billion and an enterprise value of $225 billion, Broadcom has been one of the top performers in the S&P 500. In the last 10 years, Broadcom stock is up 1,250% and despite its market-beating gains, it still provides a tasty dividend yield of 3.05%.
Analysts expect Broadcom sales to rise by 14% year over year in fiscal Q2 to $6.51 billion while earnings growth is forecast at 25% compared to the prior-year period.
Broadcom provides enterprises with solutions in the data center, broadband, and server storage verticals. Currently, it generates considerable cash flows from its Wi-Fi 6E solution which is a chip that delivers high speed with lower latency.
In fiscal 2020, the company’s free cash flow soared by 25% to $11.6 billion. In fiscal Q1 this growth accelerated to 36% year over year as Broadcom reported $3 billion in cash flows. Broadcom’s interest payments stood at $570 million and its dividend payouts were over $1.5 billion in Q1 which suggests it has enough room to increasing dividends going forward.
Alternatively, investors might be worried about the company’s high debt of $42 billion. But the tech giant also ended the January quarter with close to $10 billion in cash.
Disclaimer: The writer is an experienced financial consultant who writes for Finscreener.org. The observations he makes are his own and are not intended as investment or trading advice.
