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HP (HPQ) Set to Report Q1 Earnings: What's in the Offing?

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HP Inc. (HPQ - Free Report) is slated to report first-quarter fiscal 2022 results on Feb 28.

The company expects fiscal first-quarter non-GAAP earnings per share between 99 cents and $1.05. The Zacks Consensus Estimate for earnings is pegged at $1.03, indicating an improvement of 12% from the year-ago quarter.

The Zacks Consensus Estimate for revenues stands at $16.66 billion, suggesting growth of 6.5% from the prior-year quarter.

HP’s earnings surpassed the consensus mark in each of the trailing four quarters, the average surprise being 18%.

Let’s see how things have shaped up for HPQ before this announcement.

HP Inc. Price and EPS Surprise HP Inc. Price and EPS Surprise

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

Factors at Play

HP’s first-quarter performance is likely to have benefited from strong demand for commercial PCs, mainly driven by the recovery in economic activities and reopening of offices. Services like HP Provisioning Connect, which aims at setting up and supporting devices in employees’ homes and offices, might have driven the company’s sales in the quarter under review. The HyperX acquisition is expected to have contributed to HP’s Personal System business performance in the to-be-reported quarter.

However, the declining demand for consumer and educational PCs might have hurt personal systems’ sales during the first quarter.

HP’s printing segment is likely to have gained from strong demand for consumer printers and a continued improvement in the commercial end market as organizations worldwide are slowly resuming their in-premise operations. The global launch of the smartest printing system — HP+ — in late April 2021 has broadened the California-based company’s customer reach, which may have boosted printers’ sales in the to-be-reported quarter.

However, HP anticipates industry-wide components’ supply constraints to impact its ability to meet demand for both PCs and printers. Also, the resurgence in COVID-19 cases due to the emergence of the Omicron variant is expected to have caused some manufacturing, port and logistics disruptions during the fiscal first quarter. These factors are expected to have curbed HPQ’s revenues in the quarter under review.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for HP this time. 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. However, that’s not the case here.

Although HP currently carries a Zacks Rank of 2, it has an Earnings ESP of -1.29%. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Stocks With the Favorable Combination

Per our model, Zscaler (ZS - Free Report) , Nutanix (NTNX - Free Report) and Hewlett Packard Enterprise (HPE - Free Report) have the right combination of elements to post an earnings beat in their upcoming releases.

Zscaler carries a Zacks Rank #2 and has an Earnings ESP of +3.60%. The company is scheduled to report second-quarter fiscal 2022 results on Feb 24. Zscaler’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 52.9%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for ZS’ second-quarter earnings is pegged at 11 cents per share, indicating year-over-year growth of 10%. The consensus mark for revenues stands at $242 million, suggesting a year-over-year increase of 54.1%.

Nutanix is slated to report second-quarter fiscal 2022 results on Mar 2. The company carries a Zacks Rank #3 and has an Earnings ESP of +1.75% at present. Nutanix’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 27.2%.

For the second quarter, the Zacks Consensus Estimate is pegged at a loss of 21 cents per share, suggesting a significant year-over-year improvement from a loss of 37 cents reported in the year-ago quarter. NTNX’s quarterly revenues are estimated to increase 17.8% year over year to $407.9 million.

Hewlett Packard Enterprise currently carries a Zacks Rank #3 and has an Earnings ESP of +1.09%. The company is slated to report its first-quarter fiscal 2022 results on Mar 1. Hewlett Packard Enterprise’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 14.4%.

The Zacks Consensus Estimate for Hewlett Packard Enterprise’s first-quarter earnings stands at 46 cents per share, implying a year-over-year decrease of 11.4%. HPE is estimated to report revenues of $7.02 billion, which suggests growth of 2.7% from the year-ago quarter.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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