Is HP Oversold After Earnings?

With shares of Hewlett-Packard (NYSE:HPQ) trading around $22, is HPQ an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Hewlett-Packard provides products, technologies, software, solutions, and services to individual consumers, small and medium businesses, and large enterprises worldwide. The company offers commercial notebooks and desktops, consumer notebooks, desktops, software, and services for the commercial and consumer markets. The services segment provides consulting, outsourcing, and technology services to infrastructure, applications, and business process domains. The diverse technological products and services offered by Hewlett-Packard make it a leading provider that sees increased demand through global expansion.

Hewlett-Packard reported earnings Wednesday morning. The company beat analyst expectations, bringing in a profit of $1.39 billion versus a loss of $8.9 billion last year, but shares still sank during pre-market trading as the company said it does not expect to see growth in the next fiscal year. The company is also planning to cut 29,000 jobs as it struggles to cope with the slumping PC market.

T = Technicals on the Stock Chart Are Mixed

Hewlett-Packard stock has been rising higher in the last few months, but the stock is now trading lower after a negative earnings report. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Hewlett-Packard is trading between its key averages, which signals neutral price action in the near term.

HPQ

Source: Thinkorswim