Along with the beginning of Q1 2015 earnings reports, the last of the fourth quarter 2014 earnings reports are being announced in the next few weeks. What should investors watch for this week?
Hewlett-Packard (NYSE: HPQ):
Hewlett-Packard is scheduled to announce its earnings results for the first quarter of 2015 on Tuesday, February 24th after market close. The company is expected to post $0.91 earnings per share, up one cent from the same quarter a year prior, and $27.35 billion in revenue.
In the fourth quarter of 2014 Hewlett-Packard disappointed investors by posting revenue of $28.4 billion, representing a 2% decline year-over-year. The company’s weakness stems from its IT services which has been representing a challenge for the industry as a whole. However, HP seems to be flourishing in its hardware business which analysts expect will help its revenue in its first quarter earnings.
Additionally, HPQ’s free cash flow in the fourth quarter of 2014 totaled $8.5 billion and $12.3 billion for the entire fiscal year. However, analysts do not anticipate much of a change in 2015 cash flow.
In October 2014, Hewlett-Packard announced plans to split into two separate publicly traded companies by the end of 2015. This will likely happen sometime between August and November of this year, or in between its third or fourth quarter. Hewlett Packard will divide into HP, which will sell computers and printing operations, and HP Enterprise, which will sell all software, storage, and cloud services.
On average, the top analyst consensus for Hewlett-Packard on TipRanks is Moderate Buy.
DreamWorks (NASDAQ: DWA):
DreamWorks is poised to announce its fourth quarter 2014 earnings results on Tuesday, February 24th after market close. The company is expected to post a loss of -$3.15 a share, down from $0.33 earnings per share the same quarter last year. DreamWorks is also expected to post revenue of $248.90 million.
DreamWorks has been struggling to keep up with competitors since the end of its wildly successful Shrek franchise in 2007. In fact, the entertainment company took a significant hit when the latest sequel of its Madagascar franchise, Penguins of Madagascar, brought in a mere $36 million in domestic box office revenue over the five-day Thanksgiving holiday weekend in 2014.
Shares of DreamWorks recently fell to a new 52-week low on Friday, January 23rd following the company’s restructuring announcement. As a part of its restructuring plans, DreamWorks will cut 500 jobs by the end of 2015 and reduce the number of films it produces each year going from three to two in an effort to improve profitability. With that said, DreamWorks only has one film slated for the beginning of 2015, called Home.
DreamWorks Animation plans to take a $290 million pre-tax charge for its restructuring plan, expecting to save $30 million in 2015 and to grow to about $60 million by 2017.
In addition, DreamWorks spent $1 million on an Oscar campaign for its barely successful film How to Train Your Dragon 2 to gain back some lost credibility from its recent flops like Penguins of Madagascar and Mr. Sherman and Peabody. However, at the 2015 Oscars on February 22nd Dreamworks lost best animated motion picture to Disney’s Big Hero 6.
On average, the top analyst consensus for DreamWorks on TipRanks is Hold.
Target (NYSE: TGT):
Retail giant Target is set to announce its fourth quarter 2014 earnings report on Wednesday, February 25th before the market opens. The company is expected to post earnings of $1.46 a share, up from $1.30 earnings per share year-over-year.
Target has not had the best year, having suffered from a severe data breach during the 2013 holiday season and having to shut down all of its Canadian branches starting in January of 2015. However, Target has been well on its way to making a comeback, even earning back the trust of its consumers. With the current market conditions, Wall Street now believes Target is very well-positioned to reap the benefits from strong economic growth in the United States and lower gas prices.
In addition, Target’s biggest competitor, Wal-Mart (NYSE: WMT), announced plans to increase the pay of 500,000 employees across the United States during its fourth quarter earnings results last week, leaving analysts and investors alike questioning how Target compensates its employees. Target has made it clear that it already pays employees above the federal minimum wage.
On average, the top analyst consensus for Target on TipRanks is Hold.
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