HPQ Set to Report Q3 Earnings: What's in Store for the Stock?

HP Inc. (HPQ) faces a mixed outlook for its Q3 fiscal 2025 earnings, with Zacks Consensus Estimates projecting revenues of $13.96 billion (+3.3% YoY) and EPS of $0.75 (-9.6% YoY), while HP guides for non-GAAP EPS between $0.68 and $0.80. Strength in the Personal Systems segment, driven by AI PC and gaming sales, is expected to bolster top-line growth to an estimated $9.99 billion (+6.7% YoY). However, this momentum is likely to be tempered by softness in the Printing division, projected at $3.95 billion (-4.6% YoY), and broader macroeconomic challenges impacting overall PC demand. Notably, HPQ has missed consensus EPS in the preceding four quarters, and current models do not conclusively predict an earnings beat for the upcoming report, suggesting continued investor scrutiny on its performance drivers.

Analysis

HP Inc. (HPQ) is approaching its third-quarter fiscal 2025 earnings report with a bifurcated outlook, characterized by growth in its Personal Systems segment being counteracted by weakness in Printing and broader macroeconomic pressures. Consensus estimates project a 3.3% year-over-year revenue increase to $13.96 billion, yet anticipate a 9.6% decline in EPS to $0.75, which falls within HP's own guidance range of $0.68 to $0.80. The primary growth driver is the Personal Systems division, for which sales are estimated to reach $9.99 billion, a 6.7% YoY improvement fueled by the AI PC refresh cycle and new gaming hardware launches. Conversely, the Printing segment is expected to contract by 4.6% to $3.95 billion, weighed down by softened consumer demand in China. Compounding these challenges are persistent high interest rates and cautious enterprise IT spending, which threaten to dampen overall PC demand. Critically, HPQ has a trailing history of missing EPS estimates for four consecutive quarters, with an average negative surprise of 4.3%, and forecasting models do not currently indicate a high probability of an earnings beat, suggesting a cautious stance is warranted.

Key Decisions for Investors

• Investors should closely monitor the performance of the Personal Systems segment relative to its 6.7% growth forecast, as its ability to offset the expected 4.6% decline in the Printing division is crucial to meeting overall revenue targets.
• Given the company's consistent earnings misses over the past four quarters and a neutral earnings prediction model, it may be prudent to consider hedging strategies or trimming positions to mitigate potential downside risk from another earnings disappointment.
• Pay close attention to management's forward-looking commentary on the traction of its new AI PC products and any shifts in enterprise IT spending, as these are the key catalysts that will determine the company's growth trajectory beyond this quarter.