HPQ Earnings Preview: Steady EPS Growth Amid Market Challenges

A recent report highlights HP Inc.'s upcoming earnings, projecting a slight EPS increase and a slight revenue drop. Despite lagging behind broader market trends, analysts point to a Zacks Rank of #4 as a cause for caution among investors focusing on profitability and growth metrics.

Date: 09-10-2024

AI Rating: 5

HP Inc. (HPQ) is currently experiencing a mixed performance in the stock market. While its stock price recently closed at $36, reflecting a gain of +0.25%, this is below the S&P 500, which gained 0.97% on the same day. Over the past month, HP's stock climbed 5.06%, but it still lags behind the performance of its sector and overall market gains.

Investors are particularly interested in the forthcoming earnings report. The anticipated EPS of $0.93 represents a 3.33% increase year-over-year, which is a positive signal. However, revenue is expected to be $13.96 billion, marking only a 1% increase from the previous year. The full-year estimates suggest a slight rise in EPS (+3.35%) but a slight decline in revenue (-0.55%). This duality in growth signals could indicate mixed investor sentiment, as increasing earnings are often seen as favorable.

With a current Zacks Rank of #4 (Sell), which indicates a less favorable outlook among analysts, investors may exercise caution. The report emphasizes the importance of analyst revisions, suggesting that unchanged estimates could reflect a lack of positive momentum in HP's business trends. The Forward P/E ratio of 10.6 may indicate that HP is undervalued compared to the industry average of 15.42, but the higher PEG ratio of 2.62 suggests that the market might not fully value the expected earnings growth.

Furthermore, as HP's industry ranks within the bottom 27% of over 250 industries according to the Zacks Industry Rank, this indicates a weak competitive position. Combined with the relatively stagnant EPS estimates over the last 30 days, this could lead to stock price volatility following the earnings release.

Stocks: HPQ