HP (HPQ) to Report Q3 Earnings: What's in Store for the Stock?

HP Inc. HPQ is set to report third-quarter fiscal 2020 results on Aug 27.

The company had not issued any guidance for the fiscal third quarter citing uncertainties related to the duration of the COVID-19 pandemic, and the timing and pace of economic recovery.

The Zacks Consensus Estimate for quarterly revenues is pinned at $13.76 billion, indicating a 5.8% year-over-year decrease. The consensus mark for earnings is pegged at 44 cents per share, suggesting a year-over-year decline of 24.1%.

HP Inc. Price and Consensus

HP Inc. Price and Consensus

HP Inc. price-consensus-chart | HP Inc. Quote

The company’s earnings surpassed estimates in all of the trailing four quarters, the surprise being 11.3%, on average.

Let’s see how things have shaped up for the upcoming announcement.

Factors at Play

HP’s fiscal third-quarter performance is expected to have been negatively impacted by the coronavirus outbreak. The company had also stated during its fiscal second-quarter earnings conference call that the pandemic would hurt its revenues, earnings and cash flows during the third quarter.

Notably, HP is likely to have benefited from solid demand for personal systems during the to-be-reported quarter, driven by the remote-working and online-learning wave. Nevertheless, supply constraints, and elevated components and logistics costs might have thwarted its overall third-quarter performance.

Furthermore, the competitive pricing environment and Intel’s CPU shortage are likely to have been deterrents for its Personal Systems business. Additionally, given the softness in the EMEA market, weak supply revenues are likely to have hurt its Printing business.

Adverse foreign-currency fluctuations and macroeconomic woes are the key concerns this earnings season.

What Our Model Says

Our proven model predicts an earnings beat for HP this season. The combination of a positive Earnings ESP, and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the chances of an earnings beat. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

HP currently carries a Zacks Rank of 3 and has an Earnings ESP of +2.86%.

Other Stocks With Favorable Combinations

Here are some other companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:

Autodesk ADSK has an Earnings ESP of +4.44% and carries a Zacks Rank of 2, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ambarella AMBA has an Earnings ESP of +100.00% and carries a Zacks Rank of 3, at present.

Nutanix NTNX has an Earnings ESP of +5.71% and currently carries a Zacks Rank of 3.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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