It has been about a month since the last earnings report for HP (HPQ Quick QuoteHPQ - Free Report) . Shares have added about 3.9% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is HP due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

HP Q4 Earnings and Revenues Beat Estimates

HP Inc. reported fourth-quarter fiscal 2023 non-GAAP earnings of 90 cents per share, which surpassed the consensus mark by a penny and came within management’s previously guided range of 85-97 cents. Moreover, the bottom line improved 10% on a year-over-year basis, mainly driven by lower commodity and logistics expenses and efficient cost management, partially offset by a reduction in revenues and unfavorable currency exchange rates.

HP’s net revenues of $13.8 billion came in higher than the Zacks Consensus Estimate of $13.68 billion but declined 6.5% year over year. In constant currency (cc), revenues declined 5% in the fourth quarter. The dismal top line reflected a weak performance in HPQ’s Personal Systems (“PS”) and Printers segments.

Quarter in Detail

PS revenues (68% of net revenues) came in at $9.4 billion, which was 8% lower than the year-ago quarter’s figure (7% down at cc). Our estimate for PS segment revenue was pegged at $9.08 billion.

HP’s total PC units sold were flat on a year-over-year basis, with 9% growth in Consumer PS shipments, while Commercial PS units sold declined 6% year over year. Revenues from the Consumer PS and Commercial PS segments registered a year-over-year drop of 1% and 11%, respectively.

The printing business’ revenues (32% of net revenues) decreased 3% year over year (down 2% at cc) to $4.4 billion, mainly due to lower Consumer Printing and Commercial Printing revenues, partially offset by an improvement in Supplies sales. Our estimate for Printing segment revenue was pegged at $4.6 billion.

Consumer Printing net revenues were down 21%, and Commercial Printing net revenues decreased 4%. Supplies net revenues were up 3% (up 4% in constant currency). Total hardware units declined 19% overall.

Region-wise, in constant currency, the Americas declined 13%, the EMEA fell 12% and the APJ decreased 9%.

Operating Results

Segment-wise, PS’ non-GAAP operating margin expanded 250 basis points (bps) to 6.7% due to lower commodity and logistics expenses and efficient cost management. This was partially offset by an unfavorable product mix and forex.

The Printing division’s non-GAAP operating margin shrunk 80 bps to 18.9%.

HP’s overall non-GAAP operating margin from continuing operations of 10.3% expanded 170 bps year over year.

Balance Sheet and Cash Flow

HP ended the fiscal fourth quarter with cash, cash equivalents and restricted cash of $3.23 billion, down from $1.7 billion at the end of the previous quarter.

During the quarter, HPQ generated $1.98 billion worth of cash for operational activities and $1.87 billion in free cash flow. During full fiscal 2023, the company generated operating cash flow and free cash flow of $3.57 billion and $3.09 billion, respectively.

HP returned $259 million to its shareholders in the form of cash dividends in the fiscal fourth quarter and $1.04 billion during fiscal 2023. In the fourth quarter, HPQ did not repurchase any shares. However, it bought back $100 million of common stock in fiscal 2023.

Guidance

HP initiated guidance for the first quarter while reiterating the fiscal 2024 outlook. For the first quarter of fiscal 2024, the company estimates non-GAAP earnings per share (EPS) between 76 cents and 86 cents (midpoint 81 cents).

For fiscal 2024, the company continues to project non-GAAP EPS between $3.25 and $3.65 (midpoint $3.45). HPQ also reaffirmed its free cash flow guidance of $3.1-$3.6 billion for fiscal 2024.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

At this time, HP has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, HP has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

HP belongs to the Zacks Computer - Mini computers industry. Another stock from the same industry, 3D Systems (DDD Quick QuoteDDD - Free Report) , has gained 29.1% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.

3D Systems reported revenues of $123.79 million in the last reported quarter, representing a year-over-year change of -6.4%. EPS of $0.01 for the same period compares with -$0.05 a year ago.

3D Systems is expected to post break-even earnings per share for the current quarter, representing a year-over-year change of +100%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for 3D Systems. Also, the stock has a VGM Score of D.