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H-P Humming Along

In a quarter that has wounded so many tech giants, Hewlett-Packard's (HPQ - Get Report) bottom-line beat on Tuesday had its investors feeling giddy amid another down session in tech stocks.

Thanks to strong profit margins across many of its key businesses, H-P boosted its net income by more than 50% year over year, with an EPS several cents above Wall Street estimates -- the latest in a string of impressive results produced by the company's restructuring plan.

"HP is a company that we think is really in a sweet spot right now," said Mark Hillman, the chief information officer of Hillman Capital Management, which has a long position in the company. "We think CEO Mark Hurd is just getting started as far as making the enterprise more efficient and more profitable."

The company achieved 24.8% gross margins and 8% operating margins during its fiscal second quarter, its highest level in years, according to analysts.

And the prospect that even more savings lie ahead was enough to put aside, at least for the moment, any questions about the company's top line, which grew 5% year over year to $22.6 billion during the quarter.

Shares of H-P were recently up 3.7%, or $1.14, at $32.25 on Wednesday morning.

By contrast, shares of Intel (INTC - Get Report), Dell (DELL - Get Report) and Microsoft (MSFT - Get Report) are all down or flat this earnings season.

A tech landscape clouded by slowing PC demand and rumors of price wars has contributed to the Street's glum outlook. (Indeed, the Nasdaq was falling another 1% on Wednesday.) But investors appeared confident that the course set by H-P's management would protect the company from any unpleasantness.

"In the current environment, HPQ could be one of the best defensive stocks, providing both a shelter in the midst of a battered tech tape and a solid opportunity for upside," wrote Goldman Sachs analyst Laura Conigliaro in a note to investors raising her earnings estimates for H-P. (Goldman Sachs has received compensation from H-P for investment banking and noninvestment banking services in the past 12 months and is a specialist in H-P securities).

To view Street Insight's video review of Hewlett-Packard, please click here .

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