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

HPQ is expected to release its Q2 fiscal 2025 earnings on May 28, with revenue projected to reach $13.36 billion, a 4.3% increase year-over-year, and non-GAAP EPS estimated between 75 and 85 cents. The Personal Systems segment is expected to drive growth, particularly from AI PCs, while the Printing division may see a decline due to softened demand in China; however, Zacks' model suggests HPQ is unlikely to beat earnings estimates this quarter, citing a negative Earnings ESP of -1.25%.

Analysis

HP Inc. (HPQ) is scheduled to report its second-quarter fiscal 2025 results on May 28, with consensus revenue estimates at $13.36 billion, indicating a 4.3% year-over-year improvement. The company anticipates non-GAAP earnings per share between 75 and 85 cents, with a midpoint of 80 cents, which aligns with the Zacks Consensus Estimate that has remained unchanged for 60 days but represents a 2.4% decline from the prior year's 82 cents. HPQ's recent earnings history shows a tendency to miss estimates, having done so in three of the last four quarters with an average negative surprise of 1.16%. The upcoming quarter's performance is expected to be driven by growth in the Personal Systems segment, projected at $9.19 billion (a 9% YoY increase), largely due to traction from new AI PC offerings like the HP OmniBook Ultra Flip and HP EliteBook X, alongside strength in gaming hardware. Conversely, the Printing division is anticipated to contract by 3% YoY to $4.24 billion, impacted by softened demand in China and aggressive pricing, though growth in big tank printers may offer some offset. Macroeconomic headwinds, including high interest rates, inflation, and cautious enterprise IT spending, are expected to temper consumer and commercial PC demand. Critically, Zacks' proprietary model does not predict an earnings beat for HPQ, citing a Zacks Rank #3 (Hold) and a negative Earnings ESP of -1.25%, contrasting with more favorable outlooks for peers like Dell, Nutanix, and Salesforce.

Key Decisions for Investors

• Investors should exercise caution ahead of HPQ's earnings, given the mixed segment outlook, projected year-over-year EPS decline, and a negative Earnings ESP which historically signals a lower probability of an earnings beat.
• Closely monitor the reported sales figures for the Personal Systems division, particularly the contribution from new AI PC models, and the actual decline in the Printing segment to gauge the impact of macroeconomic pressures and competitive dynamics.
• Consider HPQ's track record of recent earnings misses and the current model's prediction when assessing risk, potentially waiting for the earnings announcement and subsequent guidance before adjusting positions.