HP Inc. (HPQ) Set to Release Q3 Earnings: What's in Store?
HP Inc. HPQ is scheduled to report third-quarter fiscal 2023 results on Aug 29.
The company expects fiscal third-quarter non-GAAP earnings per share between 81 cents and 91 cents. The Zacks Consensus Estimate for earnings is pegged at 85 cents, indicating a decline of 18.3% from the year-ago quarter.
The Zacks Consensus Estimate for revenues stands at $13.33 billion, suggesting a decline of 9.1% from the prior-year quarter.
HP’s earnings surpassed the consensus mark in three of the trailing four quarters while matching the same on one occasion, the average surprise being 2%.
Let’s see how things have shaped up before the announcement.
HP Inc. Price and EPS Surprise
HP Inc. price-eps-surprise | HP Inc. Quote
Factors to Consider
HP’s third-quarter performance is likely to have witnessed a negative impact of the slowdown in consumer demand for PCs and high inventory levels. HP witnessed the robust demand for its PCs during the pandemic-led work-and-learn-from-home wave.
However, the reopening of economies and offices, inflationary pressure and recession concerns have been waning the demand for PCs. The Zacks Consensus Estimate for Consumer PC’s third-quarter revenues is pegged at $3.74 billion.
Furthermore, enterprises are postponing their large IT spending plans due to the weakening global economy amid ongoing macroeconomic and geopolitical issues. This might have hurt HP’s commercial PC sales in the to-be-reported quarter. The consensus mark for Commercial PC’s third-quarter revenues is pegged at $5.05 billion.
The Zacks Consensus Estimate for HP’s Personal Systems revenues is pegged at $8.79 billion, suggesting a year-over-year decline of 12.8%.
Per the preliminary data released by Gartner in July 2023, PC shipments in the April-June 2023 quarter plunged 16.6% year over year to 59.7 million units. The latest data compiled by the market research firm depicts the seventh consecutive quarter of a PC sales decline following two successive years of strong year-over-year growth, driven by the pandemic-led increased demand for remote working and online learning tools. (Read more: Q2 PC Shipment Data Shows Signs of Stabilization in PC Market)
However, the second-quarter PC shipment data shows a strong improvement from the first quarter when PC vendors had shipped 55.2 million units. The research firm sees the sequential improvement in PC shipments as an initial sign of stabilization in the PC market.
HP’s Printing division’s sales are likely to have been hampered by softened consumer demand. The consensus mark for the segment’s third-quarter revenues is pegged at $4.57 billion.
Furthermore, HP’s third-quarter bottom line is likely to have witnessed the benefits of favorable pricing, disciplined cost management and a better product mix. However, lower revenues, higher commodity costs, unfavorable currency exchange rates, increased investments in innovation and the go-to-market strategy are expected to have more than offset the benefits.
What Our Model Says
Our proven model does not conclusively predict an earnings beat for HP Inc. this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here.
Though HP currently carries a Zacks Rank of 3, it has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks With the Favorable Combination
Per our model, Patterson Companies PDCO, Dave & Buster’s Entertainment PLAY and Science Applications International SAIC have the right combination of elements to post an earnings beat in their upcoming releases.
Patterson Companies carries a Zacks Rank #2 and has an Earnings ESP of +5.66%. The company is scheduled to report first-quarter fiscal 2024 results on Aug 30. Its earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missing the same on one occasion, with the average surprise being 4.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Patterson Companies’ first-quarter earnings stands at 40 cents per share, 25% higher than the year-ago quarter. It is estimated to report revenues of $1.57 billion, which suggests an increase of approximately 3.2% from the year-ago quarter.
Dave & Buster’s carries a Zacks Rank #3 and has an Earnings ESP of +4.57%. The company is slated to report second-quarter fiscal 2024 results on Sep 6. Its earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missing the same on one occasion, with the average surprise being 6.8%.
The Zacks Consensus Estimate for PLAY’s second-quarter earnings is pegged at 94 cents per share, indicating a year-over-year increase of 54.1%. The consensus mark for revenues stands at $557.9 million, suggesting a year-over-year increase of 19.1%.
Science Applications is anticipated to report second-quarter fiscal 2024 results on Sep 7. The company has a Zacks Rank #3 and an Earnings ESP of +5.00% at present. Science Applications’ earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 14.5%.
The Zacks Consensus Estimate for SAIC’s second-quarter earnings is pegged at $1.60 per share, suggesting a decline of 8.6% from the year-ago quarter’s earnings of $1.75. Science Applications’ quarterly revenues are estimated to decrease 7.6% year over year to $1.69 billion.
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HP Inc. (HPQ) : Free Stock Analysis Report
Patterson Companies, Inc. (PDCO) : Free Stock Analysis Report
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Dave & Buster's Entertainment, Inc. (PLAY) : Free Stock Analysis Report
