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HP (HPQ) Q3 Earnings Match Estimates, Revenues Decline Y/Y
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HP Inc. (HPQ - Free Report) reported third-quarter fiscal 2023 non-GAAP earnings of 86 cents per share, which matched the Zacks Consensus Estimate and came within management’s previously guided range of 81-91 cents.
However, the bottom line declined 17% from the year-ago quarter’s earnings of $1.03 per share. This was mainly due to lower revenues, increased pricing competition and unfavorable currency exchange rates, partially offset by efficient cost management.
HP’s net revenues of $13.1 billion fell short of the Zacks Consensus Estimate by 1.23% and declined 9.9% year over year. In constant currency (cc), revenues declined 7% in the third quarter. The dismal top line reflected a weak performance in HPQ’s Personal Systems (PS) and Printers segments.
Personal Systems revenues (67.9% of net revenues) came in at $8.9 billion, which was 11% lower than the year-ago quarter’s figure (8% down at cc).
HP’s total PC units sold were up 3% on a year-over-year basis, with 8% growth in Consumer PS shipments while Commercial PS units sold remained flat year over year. Revenues from the Consumer PS and Commercial PS segments registered a year-over-year decline of 12% and 11%, respectively.
The printing business’ revenues (32.1% of net revenues) decreased 7% year over year (down 5% at cc) to $4.3 billion, mainly due to lower Consumer Printing and Supplies revenues.
Consumer Printing net revenues were down 28% and Commercial Printing net revenues were down 6%. Supplies net revenues were down 2% (flat in constant currency).
Total hardware units declined 19% overall, with Consumer Printing units down 20% and Commercial Printing units down 8%.
Region-wise, in constant currency, Americas declined 8%, EMEA fell 5% and APJ decreased 9%, due to weakened demand in China.
Operating Results
Segment-wise, Personal Systems’ non-GAAP operating margin contracted 10 basis points (bps) to 6.6% owing to increased pricing competition, mix currency and higher operating expense due to the Poly acquisition. This was partially offset by lower costs, including commodity costs, structural cost savings and logistics expense.
The Printing division’s non-GAAP operating margin shrunk 120 bps to 18.6% due to competitive pricing and unfavorable currency, partially offset by structural cost savings and favorable mix.
HP’s overall non-GAAP operating margin from continuing operations of 10.3% contracted 10 bps year over year.
Balance Sheet and Cash Flow
HP ended the fiscal third quarter with cash and cash equivalents of $1.7 billion, down from $1.94 billion at the end of the previous quarter.
During the quarter, HPQ generated $1 billion worth of cash for operational activities and $0.9 billion in free cash flow.
The company returned $0.3 billion to its shareholders in the form of cash dividends in the fiscal third quarter.
Fourth-Quarter & Fiscal 2023 Guidance
For the fourth quarter of fiscal 2023, HP estimates non-GAAP earnings per share (EPS) between 85 cents and 97 cents.
For fiscal 2023, HP estimates non-GAAP diluted net EPS in the range of $3.23 to $3.35. It also continues to estimate generating free cash flow of $3 billion in the fiscal 2023.
Zacks Rank & Other Stocks to Consider
HP currently has a Zacks Rank #2 (Buy). Shares of HPQ have gained 16.8% in the year-to-date period.
The Zacks Consensus Estimate for NVIDIA's third-quarter fiscal 2024 earnings has been revised upward by 39.7% to $3.24 per share in the past seven days. For fiscal 2024, earnings estimates have increased by 30.8% cents to $10.46 per share in the past seven days.
NVIDIA’s earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missing on one occasion, the average surprise being 9.8%. Shares of NVDA have surged 233.8% YTD.
The Zacks Consensus Estimate for Manhattan Associates’ third-quarter 2023 earnings has been revised 5 cents northward to 77 cents per share in the past 60 days. For 2023, earnings estimates have moved 22 cents upward to $3.09 per share in the past 60 days.
Manhattan Associates’ earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 31.6%. Shares of MANH have rallied 65.1% YTD.
The Zacks Consensus Estimate for CrowdStrike's second-quarter fiscal 2024 earnings has remained unchanged at 56 cents per share in the past 60 days. For fiscal 2024, earnings estimates have remained unchanged at $2.39 per share in the past 60 days.
CrowdStrike's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 19.2%. Shares of CRWD have risen 39.3% YTD.
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HP (HPQ) Q3 Earnings Match Estimates, Revenues Decline Y/Y
HP Inc. (HPQ - Free Report) reported third-quarter fiscal 2023 non-GAAP earnings of 86 cents per share, which matched the Zacks Consensus Estimate and came within management’s previously guided range of 81-91 cents.
However, the bottom line declined 17% from the year-ago quarter’s earnings of $1.03 per share. This was mainly due to lower revenues, increased pricing competition and unfavorable currency exchange rates, partially offset by efficient cost management.
HP’s net revenues of $13.1 billion fell short of the Zacks Consensus Estimate by 1.23% and declined 9.9% year over year. In constant currency (cc), revenues declined 7% in the third quarter. The dismal top line reflected a weak performance in HPQ’s Personal Systems (PS) and Printers segments.
HP Inc. Price, Consensus and EPS Surprise
HP Inc. price-consensus-eps-surprise-chart | HP Inc. Quote
Quarter in Detail
Personal Systems revenues (67.9% of net revenues) came in at $8.9 billion, which was 11% lower than the year-ago quarter’s figure (8% down at cc).
HP’s total PC units sold were up 3% on a year-over-year basis, with 8% growth in Consumer PS shipments while Commercial PS units sold remained flat year over year. Revenues from the Consumer PS and Commercial PS segments registered a year-over-year decline of 12% and 11%, respectively.
The printing business’ revenues (32.1% of net revenues) decreased 7% year over year (down 5% at cc) to $4.3 billion, mainly due to lower Consumer Printing and Supplies revenues.
Consumer Printing net revenues were down 28% and Commercial Printing net revenues were down 6%. Supplies net revenues were down 2% (flat in constant currency).
Total hardware units declined 19% overall, with Consumer Printing units down 20% and Commercial Printing units down 8%.
Region-wise, in constant currency, Americas declined 8%, EMEA fell 5% and APJ decreased 9%, due to weakened demand in China.
Operating Results
Segment-wise, Personal Systems’ non-GAAP operating margin contracted 10 basis points (bps) to 6.6% owing to increased pricing competition, mix currency and higher operating expense due to the Poly acquisition. This was partially offset by lower costs, including commodity costs, structural cost savings and logistics expense.
The Printing division’s non-GAAP operating margin shrunk 120 bps to 18.6% due to competitive pricing and unfavorable currency, partially offset by structural cost savings and favorable mix.
HP’s overall non-GAAP operating margin from continuing operations of 10.3% contracted 10 bps year over year.
Balance Sheet and Cash Flow
HP ended the fiscal third quarter with cash and cash equivalents of $1.7 billion, down from $1.94 billion at the end of the previous quarter.
During the quarter, HPQ generated $1 billion worth of cash for operational activities and $0.9 billion in free cash flow.
The company returned $0.3 billion to its shareholders in the form of cash dividends in the fiscal third quarter.
Fourth-Quarter & Fiscal 2023 Guidance
For the fourth quarter of fiscal 2023, HP estimates non-GAAP earnings per share (EPS) between 85 cents and 97 cents.
For fiscal 2023, HP estimates non-GAAP diluted net EPS in the range of $3.23 to $3.35. It also continues to estimate generating free cash flow of $3 billion in the fiscal 2023.
Zacks Rank & Other Stocks to Consider
HP currently has a Zacks Rank #2 (Buy). Shares of HPQ have gained 16.8% in the year-to-date period.
Some other top-ranked stocks from the broader Computer and Technology sector are NVIDIA (NVDA - Free Report) , Manhattan Associates (MANH - Free Report) and CrowdStrike (CRWD - Free Report) . NVIDIA and Manhattan Associates sport a Zacks Rank #1 (Strong Buy) each, while CrowdStrike carries a Zacks Rank #2 at present. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for NVIDIA's third-quarter fiscal 2024 earnings has been revised upward by 39.7% to $3.24 per share in the past seven days. For fiscal 2024, earnings estimates have increased by 30.8% cents to $10.46 per share in the past seven days.
NVIDIA’s earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missing on one occasion, the average surprise being 9.8%. Shares of NVDA have surged 233.8% YTD.
The Zacks Consensus Estimate for Manhattan Associates’ third-quarter 2023 earnings has been revised 5 cents northward to 77 cents per share in the past 60 days. For 2023, earnings estimates have moved 22 cents upward to $3.09 per share in the past 60 days.
Manhattan Associates’ earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 31.6%. Shares of MANH have rallied 65.1% YTD.
The Zacks Consensus Estimate for CrowdStrike's second-quarter fiscal 2024 earnings has remained unchanged at 56 cents per share in the past 60 days. For fiscal 2024, earnings estimates have remained unchanged at $2.39 per share in the past 60 days.
CrowdStrike's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 19.2%. Shares of CRWD have risen 39.3% YTD.