HPQ Continues To Outperform The PC And Printing Markets

by Trefis Team
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HP Inc. (NYSE:HPQ) announced its fiscal Q1 results on Thursday, February 22.  The results exceeded Wall Street expectations as both the Personal Systems and Printing divisions reported growth in revenues and improvements in both market share and product mix. As a result, the company’s stock price was up by over 5% in after market hours trading. For the quarter, the company’s revenues grew by 14.5% to $14.7 billion, while non-GAAP diluted net EPS of $0.48 was at the higher end of its guidance range. The U.S. tax reform boosted its GAAP net income, and GAAP EPS grew to $1.16. For Q2, we expect the company’s revenue to grow by over 11% y-o-y to nearly $14 billion. We have created an interactive dashboard that illustrates HPQ’s results as well as our expectations going forward. You can modify drivers such as revenues for the computing and printing verticals, and margins to ascertain the impact on EPS for Q2’18.

PC Market Share Improvements

The company reported that its worldwide share in the PC market improved by 1.7% y-o-y to 23.5% on the back of new launches for the premium consumer PC market, which includes Spectre x360 and the new line of Omen X gaming laptops. As a result, its Personal System revenues grew by 13% y-o-y to $9.4 billion, with 7% growth in total units shipped. Within the Personal Systems division, Notebooks revenue grew by 14% y-o-y as unit sales improved by 8% y-o-y, while desktops revenue grew by 17% as unit sales grew by 6% y-o-y. We project that computing revenues will be around $9 billion in Q2 as both the commercial and consumer segments report growth in shipments as the product refresh and replacement cycle sets in.

The Printer division reported another quarter of growth, as revenues grew by 12% y-o-y to $5.07 billion, driven by improving sales of both supplies and hardware. While hardware unit sales increased by 14%, supplies revenues grew by 10%. Going forward, we expect that revenues from printing division will stabilize at about $5 billion in Q2.

 

At present, we have a price estimate of $18 per share for HPQ, which is below its current market price.

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