HP's EPS Shows Growth Amid Stagnant Analyst Sentiment

In a recent report, HP's upcoming earnings are projected to show a 3.33% year-over-year increase in EPS, yet the company's Zacks Rank signals a sell sentiment. Despite recent stock performance lagging behind market averages, its future revenue shows slight resilience.

Date: 03-10-2024

AI Rating: 5

HP (HPQ) has reported a +1.21% change in stock price recently, outperforming the S&P 500's minimal daily gain. However, the company has seen a decline of 1.75% in stock price over the past month, indicating underperformance compared to both the Computer and Technology sector and the broader S&P 500.

Looking ahead, analysts are focusing on HP's forthcoming earnings disclosures. The company has forecast its upcoming Earnings Per Share (EPS) to be $0.93, which represents a 3.33% increase from the same quarter last year. This indicates a positive trajectory in terms of earnings performance.

Revenue projections are also optimistic, with estimates pointing to net sales of $13.96 billion, reflecting a 1% increase from the prior period. For the total annual figures, anticipated earnings are $3.39 per share, with revenue expected to be $53.46 billion. These figures showcase slight growth in earnings but a marginal decline in revenue compared to the previous year.

However, the Zacks Rank for HP is currently set at #4 (Sell), suggesting a negative outlook as the consensus EPS projection has remained stagnant over the past 30 days. These ranks are critical because they can influence investor sentiment and stock performance. Generally, the Zacks Rank system indicates that positive revisions can correlate with stock price spikes, thus it highlights the importance of analyst forecast adjustments.

From a valuation perspective, HP is trading at a Forward Price-to-Earnings (P/E) ratio of 10.27, which is a significant discount relative to its industry's Forward P/E of 14.26. The company’s PEG ratio stands at 2.53, which suggests that its earnings growth is being factored into the valuation metrics. Comparatively, the industry average PEG ratio is 1.71, marking HP's position as overvalued concerning expected growth.

The Computer - Micro Computers industry places HP within a less favorable rank of 185 out of over 250 industries according to Zacks, placing it in the bottom 27%. This industry ranking can heavily influence HP's stock as higher-ranked industries often yield better returns.

Stocks: HPQ