HP (HPQ) Q2 Earnings and Revenues Lag Estimates

HP (HPQ) reported quarterly earnings of $0.71 per share, missing the Zacks Consensus Estimate of $0.80 and falling short of the previous year's $0.82. Revenue also disappointed, coming in at $13.22 billion versus the consensus of $13.42 billion. Given the unfavorable earnings estimate revisions, HP holds a Zacks Rank #4 (Sell), suggesting near-term underperformance, while competitor Dell Technologies (DELL) is expected to post strong earnings growth.

Analysis

HP (HPQ) reported disappointing Q2 2025 results, with quarterly earnings of $0.71 per share, missing the Zacks Consensus Estimate of $0.80 and declining from $0.82 per share in the corresponding period last year. This represents a negative earnings surprise of -11.25% and continues a pattern of underperformance, as HP has not surpassed consensus EPS estimates in the last four quarters; the previous quarter also saw a -1.33% earnings miss. Group revenues for the quarter ended April 2025 reached $13.22 billion, which, while an increase from the $12.8 billion reported a year ago, still missed the Zacks Consensus Estimate by 1.51%. This marks the third time in four quarters that HP has failed to meet revenue expectations. The company's stock performance reflects these challenges, having lost approximately 13.2% since the beginning of the year, in stark contrast to the S&P 500's 0.7% gain. Compounding these issues, the earnings estimate revision trend for HP was unfavorable leading into this report, contributing to its current Zacks Rank #4 (Sell), indicating expectations of near-term market underperformance. The broader industry context is also challenging, with the Zacks Computer - Micro Computers industry ranking in the bottom 29%. The overall sentiment surrounding these results is strongly negative, and the future direction of HP's stock will likely be heavily influenced by management's commentary during the upcoming earnings call. In contrast, competitor Dell Technologies is anticipated to report strong earnings growth, highlighting potential company-specific issues or competitive disadvantages for HP.

Key Decisions for Investors

• Given HPQ's consistent earnings and revenue estimate misses, declining year-over-year EPS, unfavorable estimate revisions, and a Zacks Rank #4 (Sell), investors should exercise significant caution and re-evaluate their positions in the stock.
• Investors must closely scrutinize management's commentary on the upcoming earnings call for any credible turnaround strategies, improved forward guidance, or cogent explanations for the persistent underperformance, as this will be critical for the stock's near-term trajectory.
• The weak ranking of the Computer - Micro Computers industry (bottom 29%) and HPQ's substantial stock underperformance (-13.2% YTD versus the S&P 500's +0.7%) should be considered significant headwinds and risk factors in any investment decision concerning HPQ.
• It is advisable to monitor upcoming results from competitors like Dell Technologies, which has positive earnings expectations, to better discern whether HP's challenges are primarily company-specific or reflective of broader shifts within the industry where HP may be ceding market share.