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HP (HPQ) Set to Report Q3 Earnings: What's in the Offing?

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HP Inc. (HPQ - Free Report) is set to report third-quarter 2021 results on Aug 26.

The company expects fiscal third-quarter non-GAAP earnings per share between 81 cents and 85 cents. The Zacks Consensus Estimate for earnings is pegged at 83 cents, indicating an improvement of 69.4% from the year-ago quarter.

The Zacks Consensus Estimate for revenues stands at $15.81 billion, suggesting growth of 10.6% from the prior-year quarter.
HP’s earnings surpassed the consensus mark in each of the trailing four quarters, the average surprise being 19.8%.

Factors to Note

HP’s third-quarter performance is likely to have benefited from solid demand for personal systems, driven by the remote-working and online-learning trends amid the COVID-19 pandemic.

HP Inc. Price and EPS Surprise

HP Inc. Price and EPS Surprise

HP Inc. price-eps-surprise | HP Inc. Quote

According to the latest data compiled by the International Data Corporation (“IDC”), worldwide shipments for personal computers (PCs) increased 13.2% year over year in second-quarter 2021. During the same period, HP registered year-over-year growth of 2.7% in its PC shipments, per the IDC’s report.

Services like HP Provisioning Connect that is aimed to setting up and supporting devices in employee's homes as well as office might have driven the company’s sales in the quarter under review.

Besides, HyperX acquisition is expected to have contributed in HP’s Personal System business performance in the quarter to be reported. Chromebooks, which are priced lower than other PC portfolios, might have raised revenue shares on account of constant and significant technology demand in the education market.

The personal computers and printers manufacturer’s printing segment is likely to have gained from strong demands for consumer printers, and continued improvement in commercial end-market as organizations worldwide are slowly resuming their in-premise operations. The global launch of smartest printing system — HP+ — in late April this year, has broadened the California based company’s customer reach, which may have boosted printers sales in the to-be-reported quarter.

Nevertheless, the company anticipates that the industry-wide components supply constraints to impact its ability to meet demand in both PCs and printers.

Management predicts gross margin pressure in the second-half of fiscal 2021 due to elevated costs and commodities and logistics across both its business units. The company anticipates more normalization in the market and pricing environment in the second half of fiscal 2021. The aforementioned factors are likely to have significantly impacted the company’s third-quarter profitability.

What Our Model Says

Our proven model predicts an earnings beat for HP this time around. The combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

HP currently has a Zacks Rank #3 and an Earnings ESP of +1.00%.

Other Stocks With Favorable Combinations

Here are some other companies which you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat this quarter:

CarMax (KMX - Free Report) has an Earnings ESP of +3.49% and a Zacks Rank #1 currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

AutoZone (AZO - Free Report) has an Earnings ESP of +9.54% and a Zacks Rank #2, at present.

AAR (AIR - Free Report) has an Earnings ESP of +4.26% and a Zacks Rank #2 currently.


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