NEW YORK (TheStreet) -- Shares of Hewlett-Packard Co (HPQ) - Get Report are gaining, up 0.63% to $35.06 in early market trading Monday, after the company agreed to buy provider of network access solutions for the mobile enterprise Aruba Networks (ARUN) for $24.67 per share in cash, Bloomberg reports.
The equity value of the transaction is about $3 billion, and net of cash and debt is about $2.7 billion.
The two companies believe that by combining its product portfolios and go-to-market strategies, revenue growth will accelerate and strengthen financial performance, Bloomberg added.
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Hewlett-Packard expects the acquisition to be accretive to earnings in the first full year following the transaction's close, which is expected in the second half of HP's fiscal year 2015.
The company's annual sales are forecast to rise by more than $1 billion by fiscal 2017 from $729 million in the year through July, according to data compiled by Bloomberg.
Hewlett-Packard is planning to split itself into two publicly traded companies later this year.
Palo Alto, CA-based Hewlett-Packard is a provider of products, technologies, software, solutions and services to individual consumers, small and medium sized businesses, and large enterprises.
Separately, TheStreet Ratings team rates HEWLETT-PACKARD CO as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate HEWLETT-PACKARD CO (HPQ) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its attractive valuation levels and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- HEWLETT-PACKARD CO' earnings per share from the most recent quarter came in slightly below the year earlier quarter. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, HEWLETT-PACKARD CO's EPS of $2.62 remained unchanged from the prior years' EPS of $2.62. This year, the market expects an improvement in earnings ($3.66 versus $2.62).
- The revenue fell significantly faster than the industry average of 30.9%. Since the same quarter one year prior, revenues slightly dropped by 4.7%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- HPQ's debt-to-equity ratio of 0.72 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that HPQ's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.66 is low and demonstrates weak liquidity.
- You can view the full analysis from the report here: HPQ Ratings Report