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Market Update

Earnings on Tap: Hewlett-Packard

HP faces increasingly fierce competition, and investors should be prepared for setbacks.

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 Hewlett-Packard (HPQ) is scheduled to report first-quarter results after the markets close Thursday. The consensus estimate is for earnings of $0.71 per share, slightly below $0.73 per diluted share reported in the first quarter of the previous year.

For the fourth quarter, the troubled tech giant's net revenue was down 7% year over year at $30 billion. Fourth-quarter loss per share amounted to $3.49. The fourth-quarter and full-year fiscal 2012 results included a noncash goodwill and intangible asset-impairment charge of $8.8 billion relating to its Autonomy business unit.

Morningstar analyst Grady Burkett thinks HP is in a difficult position. The firm faces increasingly fierce competition across its portfolio as it works through a protracted turnaround of its enterprise-services business, says Burkett.

Although Burkett expects HP to manage through its current challenges, he warns investors to be prepared for occasional setbacks and suggests they temper their expectations for future growth.

The stock has gained a whopping 42% during the trailing three months and trades near Morningstar's fair value estimate.

Gazala Parveen does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.