It has been about a month since the last earnings report for HP (HPQ). Shares have added about 6.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is HP due for a pullback? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent catalysts for HP Inc. before we dive into how investors and analysts have reacted as of late.
HPQ's Q1 Earnings Beat Estimates, Revenues Increase Y/Y
HP reported first-quarter fiscal 2026 earnings of 81 cents per share, which beat the Zacks Consensus Estimate by 5.2%. The company reported earnings of 74 cents per share a year ago. These figures are adjusted for non-recurring items.
HPQ posted revenues of $14.4 billion for the first quarter of fiscal 2026, which increased 6.7% year over year and surpassed the Zacks Consensus Estimate by 1.22%. This compares with $13.5 billion of revenues reported in the year-ago quarter.
HPQ’s Q1 Results in Detail
Personal Systems (PS) revenues (71.5% of net revenues) came in at $10.3 billion, up 11% year over year (9% in constant currency). Growth was driven by strength in both commercial and consumer PC divisions. Moreover, the company expects the Windows 11 refresh cycle and growing demand for AI PCs to be a major tailwind for 2026.
HP’s total PC units rose 12%, with Consumer PS shipments up 14% and Commercial PS shipments up 11%. On the revenue side, Consumer PS grew 16%, while Commercial PS rose 9%.
The Printing business (29.2% of net revenues) generated $4.2 billion, down 2% year over year (down 3% in constant currency). Consumer Printing revenues fell 8%, Commercial Printing declined 3%, and Supplies revenues decreased 1% (2% in CC). Total hardware units were down 6%, with both Consumer and Commercial units declining.
By geography, HP posted revenue growth in all regions. On a constant currency basis, the Americas rose 1%, EMEA was up 5%, and Asia Pacific & Japan grew 13% year over year.
In the first quarter of fiscal 2026, HPQ posted a gross margin of 19.6%, reflecting an increased mix from Personal Systems, higher costs of commodity and trading operations, partly offset by HPQ’s pricing and cost reduction measures.
HPQ posted a non-GAAP operating margin of 6.9%, down 40 basis points year over year.
Balance Sheet and Cash Flow
HP ended the fiscal first quarter with $3.2 billion in cash, cash equivalents and restricted cash, down from the previous quarter’s $3.7 billion.
During the quarter, HP generated $383 million of cash from operating activities and delivered $175 billion in free cash flow. During the quarter, the company returned $600 million to shareholders through dividends and share repurchases.
HPQ’s Guidance for Q2 and FY26
HPQ still expects its fiscal 2026 non-GAAP earnings to be in the range of $2.90 to $3.20, unchanged from the previous quarter’s projections.
HPQ expects its second-quarter fiscal 2026 non-GAAP earnings per share to be in the range of 70 cents and 76 cents.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, HP has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a score of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise HP has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Zacks Names #1 Semiconductor Stock
This under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.
With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.
See This Stock Now for Free >>HP Inc. (HPQ) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
