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HP Inc. (HPQ) Set to Release Q2 Earnings: What Awaits?

HP Inc. HPQ is scheduled to report second-quarter fiscal 2023 results on May 30.

The company expects fiscal second-quarter non-GAAP earnings per share between 73 cents and 83 cents. The Zacks Consensus Estimate for earnings is pegged at 76 cents, indicating a decline of 29.6% from the year-ago quarter.

The Zacks Consensus Estimate for revenues stands at $13.07 billion, suggesting a decline of 20.7% 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 1.1%.

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 second-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.

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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 Zacks Consensus Estimate for HP’s Personal Systems revenues is pegged at $8.37 billion, suggesting a year-over-year decline of 27.4%.

Per the preliminary data released by the International Data Corporation (“IDC”) in April 2023, PC shipments in the January-March 2023 quarter plunged 29% year over year to 56.9 million units. The latest data compiled by the market research firm depicts the fifth 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: PC Shipments Plunge in Q1 on Weak Demand & Excess Inventory)

IDC opines that the year-over-year decline was mainly due to the weakening consumer demand for PCs, high inventory levels and a bleak economic outlook. Softening IT spending amid ongoing economic and geopolitical uncertainties resulted in a decline in the demand for PCs.

HP’s Printing division’s sales are likely to have been hampered by softened consumer demand. The consensus mark for the segment’s second-quarter revenues is pegged at $4.58 billion, indicating a year-over-year drop of 7.8%.

Furthermore, HP’s second-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.

Earnings Whispers

Our proven model predicts an earnings beat for HP this time. 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, which is the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate (78 cents per share) and the Zacks Consensus Estimate (76 cents per share), is +2.24%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: HPQ carries a Zacks Rank #3.

Other Stocks With the Favorable Combination

Per our model, C3.ai AI, Zscaler ZS and Jabil JBL also have the right combination of elements to post an earnings beat in their upcoming releases.

C3.ai is set to report fourth-quarter fiscal 2023 results on May 31. The company has a Zacks Rank #3 and an Earnings ESP of +6.67% at present. C3.ai’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 46.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for AI’s fourth-quarter bottom line is pegged at a loss of 17 cents per share, suggesting an improvement from the year-ago quarter’s loss of 21 cents. C3.ai’s quarterly revenues are estimated to remain flat year over year at $72.3 million.

Zscaler carries a Zacks Rank #3 and has an Earnings ESP of +4.47%. The company is scheduled to report third-quarter fiscal 2023 results on Jun 1. Its earnings beat the Zacks Consensus Estimate in the preceding four quarters, with the average surprise being 29.7%.

The Zacks Consensus Estimate for Zscaler’s third-quarter earnings stands at 42 cents per share, implying a year-over-year increase of 147.1%. It is estimated to report revenues of $410.7 million, which suggests an increase of approximately 43.2% from the year-ago quarter.

Jabil carries a Zacks Rank #3 and has an Earnings ESP of +0.43%. The company is expected to report third-quarter fiscal 2023 results on Jun 15. Its earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 5.6%.

The Zacks Consensus Estimate for JBL’s third-quarter earnings is pegged at $1.88 per share, indicating a year-over-year increase of 9.3%. The consensus mark for revenues stands at $8.16 billion, suggesting a year-over-year drop of approximately 2%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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HP Inc. (HPQ) : Free Stock Analysis Report

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Zscaler, Inc. (ZS) : Free Stock Analysis Report

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