12:45pm (EST)
The market is off to a strong start this week and we called it right in the Weekly Wrap last night. Futures were pointing toward a big day and the Dow is currently up 132 points to 10,450. All 30 Dow stocks are showing a gain and the index has traded as high as 10,495 this morning.
The S&P 500 is back over 1,110 and is up 16 points to 1,107. The Nasdaq is up 30 to 2,176.
Hewlett-Packard (HPQ, $50.82, up $0.78) is set to report earnings after the closing bell today. The stock is approaching its 52-week high of $51.43 which was set last week and there is a ton of action in the option pits.
Wall Street expects HP to report earnings of $1.13/ share on revenue of $30.4 billion for the quarter. There are 30 analysts that cover the stock and the high estimate is $1.14 while the low estimate is $1.09. This means there is a lot of room for upside price movement should the company beat expectations.
After the number Dell (DELL, $14.67, up $0.38) posted there could also be the surprise of an earnings miss. We don’t think that is the case as we actually feel HP has been taking Dell’s lunch money. The options look cheap for us to play a possible move to $55 should the stock get some legs to where we might make a double.
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Hewlett-Packard Matches Estimates
Tuesday, November 24th, 2009
9:10am (EST)
The market bounced back in strong fashion yesterday as the bulls snapped a three-day slide and took the Dow to new highs yesterday. The Dow gained 132 points to finish at 10,450 after reaching a high of 10,524. The S&P 500 added 15 points to close at 1,106 while the Nasdaq was higher by 30 points and settled at 2,176.
Hewlett-Packard (HPQ, $51.02, up $0.98) reported earnings Monday after the market closed of $2.4 billion, or $0.99 a share, versus $2.1 billion, or $0.84 a share, in the year-ago period. Excluding one-time items, net income was $1.14 a share which matched Wall Street’s expectations.
Revenue fell 8% to $30.8 billion but was $400,000 ahead of expectations. This was a good sign as we have been saying that we would have to start seeing some revenue growth. The other bit of good news was the HP raised its 2010’s earnings.
The company now expects to earn between $4.25 and $4.35 a share for the year, compared to earlier forecasts between $4.20 and $4.30 a share. Revenue is expected come in at $118-$119 billion, compared to its previous forecast of $117-$118 billion. Wall Street is expecting full-year 2010 earnings of $4.32 a share on revenue of $118.9 billion.
In economic news, third quarter GDP (Gross Domestic Product) increased 2.8%, which in-line with what was widely expected, but down from the 3.5% increase that was posted as part of the advance GDP estimate. Personal consumption was revised downward to reflect a 2.9% increase, which was not as strong as the 3.2% increase that was widely expected.
The futures have been pointing towards a lower open but they have improved since last night. World stock markets fell last night following big gains on Monday, with China’s stock market posting its biggest drop in three months after the country’s central bank warned commercial banks to control their lending.
As we head to press, Dow futures are up a point, S&P 500 futures are up by two while the Nasdaq futures are down a half-point. We may get a lower open this morning but sentiment is improving…
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