HP Inc (HPQ) To Report Q2 Earnings: What's In The Cards?
Zacks Investment Research | May 17, 2017 09:54PM ET
HP Inc. (NYSE:HPQ) is set to report second-quarter fiscal 2017 results on May 24. Last quarter, the company posted a positive earnings surprise of 2.7%. Notably, the stock has surpassed the Zacks Consensus Estimate thrice and came in line once over the trailing four quarters. It has an average positive earnings surprise of 3.6%
Let us see how things are shaping up for this announcement.
Factors to Consider
The split from Hewlett Packard Enterprise Company (NYSE:HPE) in Nov 2015 has allowed HP to make customized approach for its businesses which was not possible while they operated as a single entity. The company is working on product innovation and differentiation as well as enhancing the capabilities of the printing business to stabilize the top line.
Furthermore, looking at the data compiled by two independent research firms – Gartner (NYSE:IT) and International Data Corporation – we believe that the downtrend in PC shipments displayed a concrete sign of improvement in first-quarter 2017 compared with the previous quarters.
Notably, for HP, this was the fourth consecutive quarter of year-over-year shipment growth, following five back-to-back quarters of underperformance. The company witnessed a 6.5% increase in PC shipments and raised its market share to 19.5% from 17.9% in the year-ago quarter. We believe that the spin-off from Hewlett Packard Company, as well as restructuring initiatives such as focus on product innovation, pricing, marketing and sales activities, divestment of non-core assets, and job cuts to lower costs, are finally paying off.
HP’s efforts to turn around the business have been commendable and seem to be in the right direction as indicated by the results of the last few quarters. We believe that the benefit of the aforementioned initiatives will have a positive impact on the to-be-reported quarterly results also.
However, macroeconomic challenges and tepid IT spending remain concerns. Competition from the likes of International Business Machines (NYSE:IBM) and Apple (NASDAQ:AAPL) also add to its woes.
HP Inc. Price and EPS Surprise
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