Earnings Preview: HP (HPQ) Q2 Earnings Expected to Decline

HP (HPQ) is expected to report a year-over-year earnings decline of 2.4% to $0.80 per share on May 28, while revenues are anticipated to increase 4.3% to $13.36 billion. The consensus EPS estimate has remained unchanged over the last 30 days; however, HP's Earnings ESP is -1.25% and it has a Zacks Rank of #4, making an earnings beat prediction difficult, as the company has only surpassed EPS estimates once in the last four quarters.

Analysis

HP Inc. is anticipated to report a year-over-year earnings decline for its second quarter ending April 2025, with consensus estimates pointing to an EPS of $0.80, representing a 2.4% decrease, despite projected revenue growth of 4.3% to $13.36 billion. While the consensus EPS estimate has remained stable over the past 30 days, several indicators from Zacks Investment Research suggest caution regarding a potential earnings beat. The company exhibits a negative Zacks Earnings ESP (Expected Surprise Prediction) of -1.25%, indicating that the Most Accurate Estimate is below the consensus, a reflection of recent bearish sentiment among analysts revising their forecasts. Coupled with a Zacks Rank of #4 (Sell), this combination historically makes it difficult to confidently predict an earnings outperformance. Further tempering expectations, HP has surpassed consensus EPS estimates only once in the preceding four quarters; in its last reported quarter, actual earnings of $0.74 per share fell short of the $0.75 estimate, a -1.33% negative surprise. Although these metrics do not guarantee an earnings miss for the May 28 report, they signal a challenging outlook for HPQ, underscoring the importance of management's subsequent discussion on business conditions for determining future earnings expectations and stock performance.

Key Decisions for Investors

• Investors should approach HP's upcoming Q2 earnings release with caution, given the forecast for a year-over-year EPS decline to $0.80, a negative Earnings ESP of -1.25%, and a Zacks Rank of #4 (Sell).
• Particular attention should be paid to whether actual revenues meet the $13.36 billion expectation, alongside any deviation in EPS, as well as management's commentary on the earnings call for insights into the sustainability of revenue growth and margin pressures.
• Considering HP's track record of beating EPS estimates only once in the last four quarters and the recent -1.33% miss, investors might factor in a higher probability of results meeting or falling below current subdued expectations.