HP (HPQ) Q2 Earnings: Taking a Look at Key Metrics Versus Estimates

HP (HPQ) reported Q2 revenue of $13.22 billion, a 3.3% year-over-year increase, but slightly below the Zacks Consensus Estimate of $13.42 billion; EPS was $0.71, down from $0.82 year-over-year and also below the consensus estimate of $0.80. While Personal Systems revenue saw a 7.1% increase, Printing revenue declined by 4.3% year-over-year, and earnings from operations in Personal Systems missed analyst estimates. HP's stock, despite outperforming the S&P 500 over the past month, currently holds a Zacks Rank #4 (Sell), suggesting potential near-term underperformance.

Analysis

HP (HPQ) reported Q2 2025 financial results presenting a mixed performance, with total revenue reaching $13.22 billion, a 3.3% year-over-year increase. However, this figure fell 1.51% short of the Zacks Consensus Estimate of $13.42 billion. Earnings per share (EPS) for the quarter stood at $0.71, marking a decline from $0.82 in the prior year and a significant -11.25% miss against the consensus estimate of $0.80. The Personal Systems segment demonstrated revenue growth of 7.1% year-over-year to $9.02 billion, with Commercial PS revenue up 8.7% to $6.79 billion and Consumer PS revenue increasing 2.5% to $2.24 billion; notably, both total Personal Systems revenue and Commercial PS revenue missed analyst expectations, though Consumer PS revenue slightly beat estimates. Critically, earnings from operations for Personal Systems were $409 million, substantially below the $532.89 million forecasted by analysts. Conversely, the Printing segment experienced a continued decline, with total revenue of $4.18 billion, down 4.3% year-over-year and marginally missing the $4.23 billion estimate. All sub-segments within Printing (Supplies, Commercial, Consumer) posted year-over-year revenue decreases, though Consumer Printing revenue and Printing operating earnings of $814 million did exceed analyst forecasts. Operational metrics indicated slightly more efficient inventory management (70 days of supply versus a 73.5-day estimate) and days payable (130 days versus a 134-day estimate), but slightly slower collections with days of sales outstanding at 30 days compared to an estimated 29 days. Despite HPQ shares returning +11.1% over the past month, outperforming the S&P 500 composite's +7.4% change, the company's overall earnings miss, challenges in Personal Systems profitability, and persistent Printing segment decline are significant, reflected in a Zacks Rank #4 (Sell) and a mildly negative sentiment score of -0.3.

Key Decisions for Investors

• Investors should scrutinize the drivers behind the significant miss in Personal Systems' operating profit, which declined to $409 million against an estimate of $532.89 million, despite overall segment revenue growth of 7.1%.
• The continued year-over-year revenue decline in the Printing segment, down 4.3% to $4.18 billion, warrants close monitoring for signs of stabilization or further deterioration, even though its operating earnings exceeded estimates.
• Given the EPS miss of -11.25%, the Zacks Rank #4 (Sell) designation, and negative sentiment signals, investors might consider a cautious approach, reassessing exposure pending clearer indications of margin improvement and a turnaround in struggling areas.