Earnings preview: PC and printer to drive HP Q1 results

HP Inc. (HPQ) is scheduled to release its earnings results for the first quarter of 2019 on Wednesday after the market closes. The results of the printer and PC maker will be driven by growth across its divisions as well as strong demand for desktop shipment and increasing popularity of gaming devices.

The Personal Systems division, which brings in a lion’s share to the top line, is likely to continue its robust performance. In the Commercial and Consumer hardware, sales are likely to be driven by an increase in hardware units than the previous year quarter.

The quarterly results would be benefited by the strong demand of its desktop among corporate buyers. Gaming devices continue to dominate the domestic market due to the upside popularity.

The results could be hurt by lower PC shipments due to Intel’s (INTC) CPU shortages as well as sluggish consumer demand, arising from political and economic unrests. This was confirmed by both Gartner and IDC. A Gartner report stated that the company witnessed a shipment decline in most crucial regions excluding Asia/Pacific and Japan.

Analysts expect the company to report earnings of $0.52 per share on revenue of $14.88 billion for the first quarter. In comparison, during the previous year quarter, the company posted a profit of $0.48 per share on revenue of $14.52 billion. Majority of analysts recommended a “strong buy” or “buy” rating while expecting the stock to reach $26.19 per share in the next 52 weeks.

For the fourth quarter, HP reported a 120% jump in earnings driven by double-digit revenue growth in the PC and Printer divisions. Revenue grew by 10% year-over-year helped by an 11% growth in the Personal Systems division and a 9% jump in the printing segment. Total hardware units were up 11%.

In the Personal Systems division, notebooks and workstations for the fourth quarter have contributed a double-digit revenue growth. In the Printing division, commercial hardware alone incurred a double-digit revenue growth.

For the first quarter, the company had expected earnings in the range of $0.46 to $0.49 per share and adjusted earnings in the range of $0.50 to $0.53 per share. For the full year 2019, HP predicted earnings in the range of $2.04 to $2.14 per share and adjusted earnings in the range of $2.12 to $2.22 per share.

Shares of HP opened higher on Monday and is trading in the green territory. The stock has risen over 8% in the past year and over 6% in the past three months.

Listen to publicly listed companies’ earnings conference calls along with the edited closed caption text.