It has been about a month since the last earnings report for HP (HPQ Quick QuoteHPQ - Free Report) . Shares have added about 5.1% 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 latest earnings report in order to get a better handle on the important drivers.

HPQ's Q3 Earnings Surpass Expectations, Revenues Rise Y/Y

HP reported third-quarter fiscal 2026 adjusted earnings of 83 cents per share, which increased 10.7% year over year and beat the Zacks Consensus Estimate by 10.7%.

HPQ reported revenues of $15.68 billion, which increased 12.5% and surpassed the consensus mark by 5.6%. Growth was led by Personal Systems as pricing and a richer premium mix offset lower unit volumes.

HPQ’s total PC units fell 16% year over year, while AI PCs accounted for 46% of shipment mix, highlighting the shift toward higher-value configurations.

HPQ's Personal Systems Revenues Hit a Q3 Record

Personal Systems revenues were $11.77 billion, up 18.5% year over year and 16.7% in constant currency. Commercial PS revenues rose 22%, while Consumer PS revenues increased 10%, reflecting continued strength across both customer groups.

Commercial PC units declined 14%, and consumer units fell 19%. Even so, HP gained 2.6 points of share in premium categories and 1.8 points in workstations sequentially. Attached businesses, including peripherals, collaboration solutions and services, contributed about one-third of Personal Systems gross profit.

HPQ Printing Revenues Slip on Lower Volumes

Printing revenues were $3.91 billion, down 2.2% year over year and 3.6% in constant currency. Supplies revenues declined 3%, Commercial Printing fell 1%, and Consumer Printing decreased 2% as hardware and supplies volumes remained under pressure.

The company continued to shift toward higher-value print categories. Tank printer units jumped 42%, while Industrial Printing posted its 12th consecutive quarter of revenue growth. 3D Printing revenues also grew at a double-digit rate for the sixth straight quarter.

HPQ Margins Face Rising Commodity Costs

HPQ's gross margin was 18.8%, pressured by higher commodity costs and a greater mix of Personal Systems revenues. Non-GAAP operating margin contracted 60 basis points year over year to 6.5%, even as pricing, growth in key areas and tariff refunds provided partial offsets.

Personal Systems operating margin fell 80 basis points to 4.6%, while Printing margin improved 110 basis points to 18.1%. The quarter's adjusted earnings included an 11-cent benefit from tariff refunds. Management said the benefit from lower-cost inventory is largely behind the company as higher-cost inventory moves through results.

HPQ’s Cash Flow Supports Capital Returns

HPQ generated $1.74 billion of operating cash flow and $1.57 billion of free cash flow in the quarter. The company ended July with $4.17 billion in cash, cash equivalents and restricted cash, while the cash conversion cycle stood at negative 37 days.

During the quarter, HPQ repurchased $300 million of stock and paid $274 million in dividends. It also paid down slightly more than $500 million of debt maturities, ending the quarter with $9.20 billion of gross debt.

HPQ Expands Its Edge AI Opportunity

HPQ expects AI PCs to account for 50% of shipment mix by the end of fiscal 2026, rising to 60-70% in fiscal 2027 and more than 70% in fiscal 2028. The company is also working with more than 150 software partners to expand workloads that can run locally on PCs.

Beyond PCs, HPQ signed a three-year, $100 million strategic agreement with RRD to accelerate AI and industrial automation in print production. Management also highlighted continued expansion of WXP, which brings PC, printer and collaboration-device management into a single platform.

HPQ Raises Fiscal 2026 Earnings and Cash Flow Outlook

HPQ raised its fiscal 2026 non-GAAP earnings outlook to $3.19-$3.29 per share from $2.90-$3.10. The new range includes a 19-cent favorable impact from estimated tariff refunds. Free cash flow guidance was also increased to $3-$3.20 billion.

For the fourth quarter of fiscal 2026, HPQ expects non-GAAP earnings of 69-79 cents per share, including an 8-cent tariff-refund benefit. Personal Systems revenues are expected to be below seasonal levels but still grow year over year, while Printing revenues are projected to follow historical seasonality.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a upward trend in estimates revision.

The consensus estimate has shifted 12.36% due to these changes.

VGM Scores

Currently, HP has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for value investors.

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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise HP has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.