HPQ Gears Up to Report Q2 Earnings: What's in Store for the Stock?

HP Inc. is expected to release its Q2 fiscal 2025 results on May 28, with revenue projected to increase 4.3% year-over-year to $13.36 billion, driven by strength in the Personal Systems segment, particularly AI PCs and gaming products; however, the Printing division may see a decline due to softened demand in China. The consensus EPS estimate is $0.80, a 2.4% decrease from the prior year, and HP's earnings history shows mixed results against estimates, with a negative earnings ESP of -1.25% suggesting a potential miss this quarter.

Analysis

HP Inc. is scheduled to report its second-quarter fiscal 2025 results on May 28, with consensus estimates pointing to a 4.3% year-over-year revenue increase to $13.36 billion, while non-GAAP earnings per share are anticipated to be $0.80, a 2.4% decline from the prior year's $0.82. This mixed outlook reflects divergent performance across its segments: the Personal Systems division is expected to drive top-line growth, with projected sales of $9.19 billion (a 9% YoY increase), buoyed by strong momentum in AI PCs—following recent launches like the HP OmniBook Ultra Flip and HP EliteBook X—and new gaming hardware. Conversely, the Printing division is forecasted to see a 3% YoY sales decline to $4.24 billion, primarily due to softened consumer demand in China and an aggressive pricing environment, although growth in big tank printers may offer some offset. Broader macroeconomic factors, including high interest rates, persistent inflation, and cautious enterprise IT spending amid geopolitical uncertainty, are expected to weigh on overall demand, particularly for consumer and commercial PCs. Notably, HPQ's earnings have missed estimates in three of the last four quarters, with an average negative surprise of 1.16%. Current signals are also cautious: while HPQ holds a Zacks Rank #3 (Hold), its Earnings ESP is -1.25%, indicating that our model does not conclusively predict an earnings beat for this quarter.

Key Decisions for Investors

• Given HPQ's negative Earnings ESP of -1.25% and a recent history of earnings misses, investors should exercise caution ahead of the Q2 fiscal 2025 earnings release, despite anticipated revenue growth.
• Investors should closely scrutinize the performance of the Personal Systems segment, particularly the adoption rate and sales contribution from new AI PC and gaming product lines, as these are key to HPQ's growth narrative.
• Pay close attention to management's commentary on the outlook for the Printing division, especially regarding demand recovery in China and pricing strategies, as well as any updates on the impact of macroeconomic headwinds on commercial PC demand and overall corporate IT spending.