Ahead of HP (HPQ) Q2 Earnings: Get Ready With Wall Street Estimates for Key Metrics

Analysts anticipate HP's Q2 earnings to be $0.80 per share, a 2.4% decrease year-over-year, with revenue expected to reach $13.43 billion, a 4.9% increase. Notably, the consensus EPS estimate saw an 8.7% upward revision in the last month, signaling increased confidence from analysts. Revenue growth is expected to be driven by Personal Systems, with Commercial PS projected to increase 12% year-over-year, while Printing revenue is forecasted to decline by 3%.

Analysis

HP Inc. (HPQ) is poised to report Q2 earnings with Wall Street analysts forecasting earnings per share (EPS) of $0.80, a 2.4% decrease year-over-year, while revenues are anticipated to reach $13.43 billion, marking a 4.9% increase compared to the same period last year. A significant indicator of shifting analyst sentiment is the 8.7% upward revision in the consensus EPS estimate over the last 30 days. The projected revenue growth is primarily attributed to the Personal Systems segment, which is expected to achieve $9.19 billion in net revenue, a 9% year-over-year increase, largely fueled by a robust 12% growth in Commercial Personal Systems (to $6.99 billion), whereas Consumer Personal Systems are seen growing marginally by 0.6% (to $2.20 billion). In contrast, the Printing segment is expected to see a 3% year-over-year decline in net revenue to $4.24 billion, with Printing Supplies revenue down by an estimated 3.8% (to $2.76 billion) and Consumer Printing revenue projected to fall by 4.1% (to $286.82 million). Operational metrics indicate an expected increase in Days in accounts payable to 134 days from 132 days year-over-year, a slight improvement in Days of sales outstanding in accounts receivable to 30 days from 31 days, and an increase in Days of supply in inventory to 73.5 days from 70 days. Correspondingly, earnings from operations for Personal Systems are forecasted to increase to $528.27 million from $508 million, while Printing operating earnings are expected to decline to $796.32 million from $829 million. HPQ shares have demonstrated positive momentum, gaining 12.5% in the past month, outperforming the Zacks S&P 500 composite's 10.7% rise, though the stock currently holds a Zacks Rank #3 (Hold), suggesting it is expected to perform in line with the market in the near term.

Key Decisions for Investors

• Investors should closely evaluate the upcoming Q2 results to ascertain if the strong projected growth in Personal Systems, particularly the 12% rise in Commercial PS, materializes and can offset the anticipated 3% revenue decline in the Printing segment and the slight 2.4% YoY EPS decrease.
• The 8.7% upward revision in consensus EPS estimates and HPQ's recent 12.5% stock price appreciation signal positive market sentiment, however, this should be balanced against the underlying challenges in the Printing division and the forecasted slight dip in overall profitability.
• Pay attention to changes in working capital metrics, such as the expected rise in Days of supply in inventory to 73.5 days and Days in accounts payable to 134 days, for their potential implications on cash flow efficiency and operational management.
• Given the mixed financial projections and a Zacks Rank #3 (Hold), a cautious approach may be warranted; investors might consider the earnings report as a key catalyst for reassessing positions, focusing on the sustainability of Personal Systems' growth momentum.