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HP (HPQ) Q1 Earnings Match, Revenues Miss, Stock Falls 3%
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HP Inc. (HPQ - Free Report) lost more than 3% during Wednesday’s extended trading session as its first-quarter fiscal 2024 revenues missed the Zacks Consensus Estimate. However, the non-GAAP net earnings per share (EPS) came in line with the consensus mark.
HP reported first-quarter fiscal 2024 non-GAAP earnings of 81 cents per share, which matched the consensus mark and came within management’s previously guided range of 76-86 cents. Moreover, the bottom line improved 11% on a year-over-year basis, mainly driven by maximized operational efficiency and cost management.
HPQ’s net revenues of $13.2 billion missed the Zacks Consensus Estimate of $13.6 billion and declined 4.4% year over year. In constant currency (cc), revenues declined 4.9% in the first quarter. The dismal top line was due to a volatile external environment affecting the demand across the industry in which HPQ operates.
Personal Systems (PS) revenues (66.7% of net revenues) came in at $8.8 billion, which was 4% lower than the year-ago quarter’s figure (5% down at cc).
HP’s total PC units sold were up 5% on a year-over-year basis, with 10% growth in Consumer PS shipments, while Commercial PS units sold declined 2% year over year. Revenues from the Consumer PS and Commercial PS segments registered a year-over-year decline of 1% and 5%, respectively. The decline was due to unfavorable market dynamics and seasonality of the business.
The printing business’ revenues (33.3% of net revenues) decreased 5% year over year (down 5% at cc) to $4.4 billion, mainly due to lower Consumer Printing and Commercial Printing revenues.
Consumer Printing net revenues were down 22% and Commercial Printing net revenues decreased 12%. Supplies net revenues were flat (up 1% in constant currency) year over year. Total hardware units declined 17% overall.
Region-wise, the Americas and Asia Pacific, Japan declined 5.9% and 9%, respectively. The EMEA region witnessed a marginal 0.7% increase in revenues.
Operating Results
Segment-wise, PS non-GAAP operating margin expanded 70 basis points (bps) to 6.1% due to lower commodity and logistics expenses and efficient cost management. This was partially offset by investments done in growing segments coupled with pricing pressure.
The Printing division’s non-GAAP operating margin expanded 100 bps to 19.9%.
HP’s overall non-GAAP operating margin from continuing operations of 8.4% expanded 80 bps year over year.
Balance Sheet and Cash Flow
The company ended the fiscal first quarter with cash, cash equivalents and restricted cash of $2.42 billion, down from $3.23 billion at the end of the previous quarter.
During the quarter, HPQ generated $121 million worth of cash for operational activities and $25 million in free cash flow. HP returned $800 million to its shareholders in the form of share repurchases and dividends.
Guidance
HP initiated guidance for the second quarter while reiterating the fiscal 2024 outlook. For the second quarter of fiscal 2024, the company estimates non-GAAP EPS between 76 cents and 86 cents (mid-point 81 cents). The mid-point of the company’s second-quarter earnings guidance is in line with the Zacks Consensus Estimate of 81 cents.
For fiscal 2024, the company continues to project non-GAAP EPS between $3.25 and $3.65 (mid-point $3.45). The mid-point of the company’s fiscal 2024 earnings guidance is in line with the Zacks Consensus Estimate. HPQ expects its free cash flow in the range of $3.1-$3.6 billion for fiscal 2024.
Zacks Rank and Stocks to Consider
Currently, HPQ carries a Zacks Rank #3 (Hold). Shares of HPQ have lost 2.7% in the past year.
The Zacks Consensus Estimate for BlackLine’s first-quarter 2024 earnings has remained unchanged at 47 cents per share for the past 90 days. Shares of BL have lost 17.1% in the past year.
The Zacks Consensus Estimate for Arista’s first-quarter 2024 earnings has been revised by 4 cents northward to $1.71 per share in the past seven days. Shares of ANET have rallied 97% in the past year.
The Zacks Consensus Estimate for DELL’s fourth-quarter 2024 earnings per share has been revised northward by a penny to $1.73 in the past seven days. Shares of DELL have surged 129.5% in the past year.
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HP (HPQ) Q1 Earnings Match, Revenues Miss, Stock Falls 3%
HP Inc. (HPQ - Free Report) lost more than 3% during Wednesday’s extended trading session as its first-quarter fiscal 2024 revenues missed the Zacks Consensus Estimate. However, the non-GAAP net earnings per share (EPS) came in line with the consensus mark.
HP reported first-quarter fiscal 2024 non-GAAP earnings of 81 cents per share, which matched the consensus mark and came within management’s previously guided range of 76-86 cents. Moreover, the bottom line improved 11% on a year-over-year basis, mainly driven by maximized operational efficiency and cost management.
HPQ’s net revenues of $13.2 billion missed the Zacks Consensus Estimate of $13.6 billion and declined 4.4% year over year. In constant currency (cc), revenues declined 4.9% in the first quarter. The dismal top line was due to a volatile external environment affecting the demand across the industry in which HPQ operates.
HP Inc. Price, Consensus and EPS Surprise
HP Inc. price-consensus-eps-surprise-chart | HP Inc. Quote
Quarter in Details
Personal Systems (PS) revenues (66.7% of net revenues) came in at $8.8 billion, which was 4% lower than the year-ago quarter’s figure (5% down at cc).
HP’s total PC units sold were up 5% on a year-over-year basis, with 10% growth in Consumer PS shipments, while Commercial PS units sold declined 2% year over year. Revenues from the Consumer PS and Commercial PS segments registered a year-over-year decline of 1% and 5%, respectively. The decline was due to unfavorable market dynamics and seasonality of the business.
The printing business’ revenues (33.3% of net revenues) decreased 5% year over year (down 5% at cc) to $4.4 billion, mainly due to lower Consumer Printing and Commercial Printing revenues.
Consumer Printing net revenues were down 22% and Commercial Printing net revenues decreased 12%. Supplies net revenues were flat (up 1% in constant currency) year over year. Total hardware units declined 17% overall.
Region-wise, the Americas and Asia Pacific, Japan declined 5.9% and 9%, respectively. The EMEA region witnessed a marginal 0.7% increase in revenues.
Operating Results
Segment-wise, PS non-GAAP operating margin expanded 70 basis points (bps) to 6.1% due to lower commodity and logistics expenses and efficient cost management. This was partially offset by investments done in growing segments coupled with pricing pressure.
The Printing division’s non-GAAP operating margin expanded 100 bps to 19.9%.
HP’s overall non-GAAP operating margin from continuing operations of 8.4% expanded 80 bps year over year.
Balance Sheet and Cash Flow
The company ended the fiscal first quarter with cash, cash equivalents and restricted cash of $2.42 billion, down from $3.23 billion at the end of the previous quarter.
During the quarter, HPQ generated $121 million worth of cash for operational activities and $25 million in free cash flow. HP returned $800 million to its shareholders in the form of share repurchases and dividends.
Guidance
HP initiated guidance for the second quarter while reiterating the fiscal 2024 outlook. For the second quarter of fiscal 2024, the company estimates non-GAAP EPS between 76 cents and 86 cents (mid-point 81 cents). The mid-point of the company’s second-quarter earnings guidance is in line with the Zacks Consensus Estimate of 81 cents.
For fiscal 2024, the company continues to project non-GAAP EPS between $3.25 and $3.65 (mid-point $3.45). The mid-point of the company’s fiscal 2024 earnings guidance is in line with the Zacks Consensus Estimate. HPQ expects its free cash flow in the range of $3.1-$3.6 billion for fiscal 2024.
Zacks Rank and Stocks to Consider
Currently, HPQ carries a Zacks Rank #3 (Hold). Shares of HPQ have lost 2.7% in the past year.
Some better-ranked stocks from the broader technology sector are BlackLine (BL - Free Report) , Arista Networks (ANET - Free Report) and Dell Technologies (DELL - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for BlackLine’s first-quarter 2024 earnings has remained unchanged at 47 cents per share for the past 90 days. Shares of BL have lost 17.1% in the past year.
The Zacks Consensus Estimate for Arista’s first-quarter 2024 earnings has been revised by 4 cents northward to $1.71 per share in the past seven days. Shares of ANET have rallied 97% in the past year.
The Zacks Consensus Estimate for DELL’s fourth-quarter 2024 earnings per share has been revised northward by a penny to $1.73 in the past seven days. Shares of DELL have surged 129.5% in the past year.