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HP Inc. (HPQ) to Report Q4 Earnings: What's in the Offing?

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HP Inc. (HPQ - Free Report) is slated to report fourth-quarter fiscal 2022 results on Nov 22.

The company expects fiscal fourth-quarter non-GAAP earnings per share between 79 cents and 89 cents. The Zacks Consensus Estimate for earnings is pegged at 84 cents, indicating a decline of 10.6% from the year-ago quarter.

The Zacks Consensus Estimate for revenues stands at $14.63 billion, suggesting a decline of 12.3% from the prior-year quarter.

HP’s earnings surpassed the consensus mark in three of the trailing four quarters while matching the same on one occasion, the average surprise being 3.6%.

Let’s see how things have shaped up before the announcement.

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

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

Factors to Consider

HP’s fourth-quarter performance is likely to have witnessed a negative impact of the weak consumer demand for PCs, supply-chain issues and high inventory levels. HP had witnessed the robust demand for its PCs during the pandemic-led work-and-learn-from-home wave. However, the reopening of economies and offices, inflationary pressure and recession concerns have been waning the demand for PCs.

Furthermore, enterprises are postponing their large IT spending plans due to the weakening global economy amid ongoing macroeconomic and geopolitical issues. This might have hurt HP’s commercial PC sales in the to-be-reported quarter. The Zacks Consensus Estimate for HP’s Personal Systems revenues is pegged at $10.36 billion, suggesting a year-over-year decline of 12.2%.

HP’s Printing division’s sales are likely to have been hampered by continued manufacturing and component supply constraints. The consensus mark for the segment’s fourth-quarter revenues is pegged at $4.48 billion, indicating a year-over-year decline of 8.1%.

Pandemic-led disruptions in manufacturing, port and logistics in China, together with the dynamic macro environment due to the Russia-Ukraine conflict, are likely to have caused operational delays. These factors are expected to have hampered HPQ’s revenues in the quarter under review.

Furthermore, HP’s fourth-quarter bottom line is likely to have witnessed the benefits of favorable pricing, disciplined cost management and a better product mix. However, lower revenues, higher commodity costs, unfavorable currency exchange rates, increased investments in innovation and the go-to-market strategy are expected to have more than offset the benefits.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for HPQ this season. 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 is not the case here.

Though HP currently carries a Zacks Rank of #3, it has an Earnings ESP of -1.19%. 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, Guidewire Software (GWRE - Free Report) , Salesforce (CRM - Free Report) and Zoom Video Communications (ZM - Free Report) have the right combination of elements to post an earnings beat in their upcoming releases.

Guidewire carries a Zacks Rank #2 and has an Earnings ESP of +2.56. The company is expected to report its first-quarter fiscal 2023 results on Dec 1. Its earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 6.9%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Guidewire’s first-quarter bottom line stands at a loss of 39 cents per share, wider than the year-ago quarter’s loss of 21 cents. Revenues are estimated to grow 14.9% year over year to $190.6 million.

Salesforce is slated to report third-quarter fiscal 2023 results on Nov 30. The company carries a Zacks Rank #3 and an Earnings ESP of +7.13% at present. CRM's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 18.8%.

The Zacks Consensus Estimate for Salesforce’s quarterly earnings is pegged at $1.21 per share, suggesting a year-over-year decline of 4.7%. Its quarterly revenues are estimated to increase 13.8% year over year to $7.81 billion.

Zoom carries a Zacks Rank #3 and an Earnings ESP of +0.27%. The company is slated to report third-quarter fiscal 2023 results on Nov 21. ZM's earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 13.4%.

For the third quarter, the Zacks Consensus Estimate for Zoom’s earnings is pegged at 84 cents per share, indicating a 24.3% year-over-year decrease. Revenues are expected to grow 4.4% to $1.1 billion.

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

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