Should Investors Be More Cautious on HP After Earnings?

By Chris Lange Published Nov 25, 9:39AM EST

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

When HP Inc. (NYSE: HPQ | HPQ Price Prediction) released fiscal fourth-quarter financial results after markets closed Tuesday, the firm said that it had $0.62 in earnings per share (EPS) and $15.3 billion in revenue. The consensus estimates had called for $0.52 in EPS and $14.65 billion in revenue, and the same period of last year reportedly had $0.60 in EPS and $15.4 billion in revenue.

During the latest quarter, Personal Systems net revenue was flat year over year at $10.4 billion (up 1% in constant currency) with a 5.1% operating margin. Commercial net revenue decreased 12%, and Consumer net revenue increased 24%. Total units were up 7% with Notebooks units up 25% and Desktops units down 31%.

Printing net revenue decreased 3% to $4.8 billion (down 2% in constant currency) with a 14.8% operating margin. Total hardware units were up 14% with Commercial hardware units down 10% and Consumer hardware units up 18%. Supplies net revenue was down 1% (flat in constant currency).

HP generated $1.8 billion of free cash flow in the fiscal fourth quarter. On the books, HP’s cash and cash equivalents totaled $4.86 billion at the end of the quarter, up from $4.54 billion at the end of the previous fiscal year.

[nativounit]

Separately, the company announced that the board of directors has declared a cash dividend of $0.1938 per share on its common stock, representing an increase of 10% from the prior dividend. The dividend is payable on January 6, to stockholders of record as of the close of business December 9.

Looking ahead to the fiscal first quarter, HP expects to see EPS in the range of $0.64 to $0.70. The consensus estimates are $0.53 in EPS and $14.12 billion in revenue for the quarter.

HP stock traded up more than 6% early Wednesday to $23.13, in a 52-week range of $12.54 to $23.93. The consensus price target is $20.39.

[recirclink id=817471][wallst_email_signup]

About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.