RBC Capital analyst, Amit Daryanani, published an earnings review of Hewlett Packard Enterprise (NYSE: HPE), one final time as a combined company. The company's Oct-qtr results ($25.7B/$0.93) include HPE and are not comparable with consensus HPE estimates ($13.5B/$0.51).

The company provided Jan-qtr EPS guidance ($0.37–0.41) slightly below consensus of $0.43 but maintained FY16 EPS guide of $1.85–1.95 (includes H3C).

The Oct-qtr represented the second consecutive quarter of positive growth ex-currency. The company maintained FY16 EPS guidance of $1.85–1.95 (includes H3C networking business) and FCF guidance of $2.0–2.2B. FY16E revenue and EPS estimates exclude H3C (~$1.5B revenue impact, $0.08–0.12 EPS impact).

HPE segments contributed $14.1B in revenue to HPQ’s Oct-qtr results of $25.7B/$0.93; however, we note that the HPE segment revenue may not be comparable to HPE consensus expectations of $13.5B/$0.51, which most likely include inter-segment eliminations. Total HPE segment revenues were down -4.0% y/y (+3% y/y CC). Revenue performance by segment included the following: EG was up +2% y/y, ES was down -9% y/y, and Software was down –7% y/y.

HPE maintained its FY16 EPS guidance range of $1.85–1.95, including Jan-qtr EPS of $0.37–0.41 (Street $0.43). On a full-year basis, the company noted the following: 1) revenue to be down slightly on a constant currency basis; and 2) free cash flow to remain in the $2.0–2.2B range with a seasonally soft Jan-qtr due to cash separation charges. Fundamentally, while the stock remains attractive on “normalized” FCF of $3B+, achieving that run-rate would require impeccable execution given that current FCF is closer to ~$2B with risk to downside.

No change to Sector Perform rating and $15 price target.

For an analyst ratings summary and ratings history on HP Enterprise click here. For more ratings news on HP Enterprise click here.

Shares of HP Enterprise closed at $13.69 yesterday.