HPQ Earnings: Growth In Printers And PC Shipment Boosts Revenue

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Hewlett Packard Inc. (NYSE:HPQ) announced its fiscal Q2 results on Wednesday, May 24.  The results were better than expected, buoyed by both the Personal Systems and Printing divisions, which reported growth in revenues and improvement in both market share and product mix. For the quarter, the company’s revenues grew by 7% to $12.4 billion. The company also reported Non-GAAP diluted net earnings per share of $0.40, which was at the higher end of its guidance range. Below we provide an overview of the key takeaways from the company’s earnings release.

For precise figures, please refer to our full analysis for Hewlett Packard Incorporated

Printer Hardware And Supplies Revenues Report Growth  

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The printer division is HPQ’s largest vertical and makes up 54% of its value, per our estimates. During the quarter, the printer segment reported a 2% year-over-year increase in revenues to $4.7 billion. While hardware revenue grew by 3% as hardware unit sales increased by 4%, supplies revenues grew by 2% year-on-year.

Supplies revenue also saw growth, as revenues grew by 2% year over year to $3.16 billion. Going forward, we expect this division to report revenue growth as it closes its acquisition of Samsung Printers and its 3D printer business continues to gain momentum.

The Personal Systems Division Reports Growth As Market Share Improves

The Personal Systems division is HPQ’s second largest division and makes up nearly 46% of its value, according to our estimates. While the shipment numbers for PCs stabilized worldwide, the company reported that its worldwide share improved by 2.3% y-o-y to 21.7% on the back of new launches for the premium consumer PC market, and it regained the #1 spot in the global PC market.

HPQ reported 5% growth in total units shipped during the quarter. While consumer revenues grew by 16%, commercial revenues grew by 7% year over year. And while the company continued to report declines in its desktop sales (revenue declined by 1% and shipments by 6%), its laptop revenues and shipments grew by 17% and 12%, respectively. As a result, the segment saw 10% year-over-year growth in revenues to $7.66 billion, while its operating profit grew by 3% to $825 million, benefiting from scale, operating cost savings, and a favorable product mix. Furthermore, PC average selling prices were up both year-over-year and sequentially, driven by favorable pricing and a shift in product mix to the premium segment of the market. Going forward, HPQ is well positioned in the PC market as it continues to launch premium and mid-tier PCs, specifically focusing on secure products such as EliteBook at competitive prices. This should help the company to report revenue growth in the coming quarters.

Outlook For Q3 2017 And 2017

For fiscal Q3, HP estimates GAAP diluted net EPS from continuing operations to be in the range of $0.36 to $0.40 and non-GAAP diluted net EPS to be in the range of $0.40 to $0.43. For 2017, HP estimates non-GAAP diluted net EPS to be in the range of $1.59 to $1.66.

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