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HP (HPQ) to Post Q1 Earnings: What's in Store for the Stock?

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HP Inc. (HPQ - Free Report) is set to report first-quarter fiscal 2019 results on Feb 27.

In the trailing four reported quarters, the company’s results surpassed the Zacks Consensus Estimate twice and came in line on two other occasions, the average positive surprise being 4.57%.

Looking back at the last reported quarter, the company delivered non-GAAP earnings of 54 cents per share, which matched the Zacks Consensus Estimate. The metric, however, improved 23% on a year-over-year basis.

HP’s total revenues climbed 10.3% year over year to $15.37 billion and also outpaced the Zacks Consensus Estimate of $15.2 billion.

So, let’s see how things are shaping up prior to the upcoming announcement.

Factors at Play

HP’s Personal Systems segment has been benefiting from growth across customer segments, geographies and products on the back of a strong portfolio, go-to-market strategy and supply chain. Solid increase in notebook revenues has been a tailwind.

Further, the company’s focus on product innovation, differentiation and enhancement of its printing business capabilities to stabilize the top line is a positive. The recent inclusion of S-Print business is leading to robust growth in Commercial hardware units.

However, both Gartner and IDC agreed that Intel’s (INTC - Free Report) CPU shortages coupled with sluggish consumer demand due to political and economic unrests like the ongoing U.S.-China trade dispute dragged down PC shipments in the fourth quarter.

Holding the second spot among worldwide PC vendors, the fourth quarter was risky for HP. After four consecutive quarters of growth, the company witnessed a shipment decline in most crucial regions except Asia/Pacific and Japan, added Gartner.

HP had a monopoly with 33.4% market share in the United States but fell 7.6% in the quarter to be reported. IDC stated that the company’s growth in the United States wasn’t smooth enough as it faced challenges due to unfavorable parallels drawn with the year-ago quarter’s impressive results.

Moreover, competition from the likes of Lenovo Group Ltd. (LNVGY - Free Report) , Dell and Apple (AAPL - Free Report) is another key concern. Notably, perboth IDC and Gartner, Lenovo maintained the top spot in the December quarter.

HP Inc. Price and EPS Surprise

HP Inc. Price and EPS Surprise | HP Inc. Quote

Guidance and Estimates for Q1

HP projects non-GAAP earnings from continuing operations in the range of 50-53 cents per share. The Zacks Consensus Estimate is pegged at 52 cents, indicating a year-over-year increase of 8.3%.

For the fiscal first quarter, the Zacks Consensus Estimate for revenues is pegged at $15.05 billion, reflecting a year-over-year rise of 3.7% but a sequential dip of 2%.

The Zacks Consensus Estimate for Personal Systems segment’s revenues stands at $9.83 billion for the fiscal first quarter, implying 4% year-over-year growth but a sequential slip of 2.4% .

The consensus estimate for Print segment revenues is $5.17 billion for the to-be-reported quarter, mirroring a 1.9% year-over-year improvement but a sequential fall of 2%.

HP carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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