HP Earnings Beat Not Enough for Investors

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HP Inc. (NYSE: HPQ) reported fiscal third-quarter financial results after markets closed Wednesday. The firm said that it had $0.43 in earnings per share (EPS) on $13.1 billion in revenue, compared with consensus estimates from Thomson Reuters that call for $0.42 EPS and $12.31 billion in revenue. In the same period of last year, HP posted EPS of $0.48 on $11.89 billion in revenue.

In terms of its segments the company reported:

  • Personal Systems net revenue was up 12% year over year (up 13% in constant currency) with a 3.7% operating margin. Commercial net revenue increased 11% and Consumer net revenue increased 14%. Total units were up 7% with Notebooks units up 12% and Desktops units down 3%.
  • Printing net revenue was up 6% year over year (up 7% in constant currency) with a 17.3% operating margin. Total hardware units were up 1% with Commercial hardware units flat and Consumer hardware units up 1%. Supplies net revenue was up 10% (up 10% in constant currency).

Looking ahead to the fiscal fourth quarter, management expects to see EPS in the range of $0.42 to $0.45. There are consensus estimates calling for $0.44 in EPS and $12.84 billion in revenue.

On the books, cash and cash equivalents totaled $6.97 billion at the end of the quarter versus $6.29 billion at the end of the previous fiscal year.

Dion Weisler, President and CEO of HP, commented:

Q3 was another outstanding quarter of successfully executing our reinvention strategy. We stabilized supplies revenue a quarter earlier than expected, posted double-digit revenue growth, delivered non-GAAP earnings per share at the high end of our previously provided outlook range and generated approximately $1.7 billion in free cash flow.

Shares of HP closed Wednesday down nearly 1% at $18.85, with a consensus analyst price target of $21.38 and a 52-week range of $13.55 to $19.58. Following the release of the earnings report, the stock was initially down 2% at $18.46 in the after-hours trading session.