Sunday, October 1, 2023

HP’s quarterly profit beat Wall Street estimates

HP’s second-quarter profit beat Wall Street estimates despite another decline in PC sales.

Despite another decline in PC sales in the second quarter, HP managed to beat earnings estimates by Wall Street, according to Brian Sozzi at Yahoo Finance.

The company saw unit sales in its PC and printing segments under pressure as businesses and consumers continue to manage their finances closely following the pandemic. But even with HP’s various cost-cutting efforts over the past year, margins in both businesses have remained intact.

“Our disciplined execution and strong innovation in a challenging macro environment enabled us to deliver non-GAAP EPS at the high end of our target in the second quarter,” HP CEO Enrique Lores said in a statement.

HP shares fell 4.5% in premarket trading on Wednesday.

Here is a summary of earnings:

  • Net sales: increased -21.7%% year-over-year to $12.9 billion versus the estimate of $13.03 billion
  • Personal Systems sales: increased -29% year-over-year to $8.2 billion versus the estimate of $8.46 billion
  • Print sales: -5% year-over-year to $4.7 billion versus the $4.6 billion estimate
  • Adjusted Operating Margin: 8.7% Vs. Estimates of 8.8% and 8.09% a year ago
  • Adjusted diluted EPS: 0.80 cents vs. 1.08 dollars last year and 0.76 cents is estimated

What else caught your attention?

  • Inventory ended the quarter at $7.2 billion, up 5 days quarter-over-quarter to 65 days
  • Printer and consumer PC unit sales fell 34% and 5%, respectively
  • fiscal third quarter earnings estimates of 0.81 cents to 0.91 cents; estimates were 0.85 cents
  • Operating margin in the Personal Systems segment remained stable despite a decline in sales
  • Printer segment operating margin marginally up despite declining sales

What did Wall Street say?

Evercore ISI (Online Rating; $33 price target):

“Net/Net: We think HP is doing well on the EPS/FCF (free cash flow) front despite a challenging macro environment. Their second half guidance implies growth in EBIT margin which we think investors will appreciate.” May make it higher. Stay cautious till we see a clear sign of recovery in demand. On the positive side, we think buybacks may resume in the second half and provide upside leverage to estimates Can do.”

HP is trading in an uptrend at $30.08 despite a bearish gap, and is above the 70 and 200 period moving averages at the open of Wednesday’s candle. Meanwhile, EI indicators are mixed.

Nation World News Desk
Nation World News Desk
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