Earnings Preview: HP likely to post upbeat Q4 earnings

Printer and PC maker HP Inc. (HPQ) is set to report its fourth-quarter earnings on Thursday after the bell. The company’s results will be benefited by the double-digit growth in the Personal Systems and Printer divisions. The results will also be gained by the strong demand for desktop shipment and the rising popularity of gaming devices.

Analysts, on average, expect the company to post earnings of $0.54 per share on revenue of $15.1 billion for the fourth quarter. In comparison, during the previous year quarter, the company reported a profit of $0.44 per share on revenue of $13.93 billion. Majority of the analysts recommended a “strong buy” or “buy” rating on the stock with an average price target of $27.38.

For the fourth quarter, the company’s top line will be benefited by the growth in the PC and Printer divisions. The Personal Systems division, which brings in a lion’s share to the top line, will continue its strong performance. The company is likely to sell more hardware units than the previous year quarter helped by the growth in the Commercial and Consumer hardware sales.

HP reports solid Q3 results, lifts 2018 profit view

For the third quarter, HP posted a 26% jump in earnings as double-digit growth in the PC and Printer divisions drove revenues higher by 12%. Personal Systems divisions sales improved 12% while the printing segment sales climbed 11%. Total hardware units were up 12%.

The company had expected earnings in the range of $0.48 to $0.51 per share and adjusted earnings in the range of $0.52 to $0.55 per share for the fourth quarter. For the full year 2018, HP predicted adjusted earnings in the range of $2.00 to $2.03 per share and earnings of $2.82 to $2.85 per share.

After returning about 66% of its free cash flow to shareholders in the third quarter, investors are looking forward to the numbers on whether the company is contributing more of its profit to its shareowners. The company is expected to issue guidance for the full year 2019.

HP has been experiencing strong demand of its desktop among corporate buyers that is likely to benefit its results for the fourth quarter. In the domestic market, gaming devices have been gaining off-lately with their popularity are on the upside.

Also, the 3D printing market remained a major traction for the company aided by its innovative and expanding portfolio as advanced 3D printing technology, HP Metal Jet, was launched during the quarter. The margins are anticipated to be impacted by the rising PC component and logistics costs and rising printing material costs.

Shares of HP opened higher on Wednesday and is trading in the green territory in the mid-afternoon. The stock has risen over 10% in the year so far and over 9% in the past year.

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