HP Inc (NYSE: HPQ) has reported the adjusted earnings per share of $0.38 in the first quarter 2017 ended January 31st, beating the analysts’ estimates for the adjusted earnings per share of $0.37. The company had reported the adjusted revenue of $12.7 billion in the first quarter 2017, beating the analysts’ estimates for revenue of $11.84 billion due to a stabilizing PC market. The stock surged over 2.5% in the pre-market session on Feb 23rd, 2017 (Source: Google finance)
HPQ has posted in Q1 2017, the personal systems net revenue of $8,224 million as compared to $7,467 million in the corresponding period 2016. The printing net revenue in the Q1 2017 is $4,483 million compared to $4,642 million the corresponding period. However, the company’s net earnings from continuing operations fell to $611 million in the first quarter, from $650 million a year earlier.
Over the past several years, HP and other computer makers are struggling a declining market for desktop computers, notebooks and workstations. The parts of the PC market are still declining, however, there are pockets of growth such as high-end corporate notebooks and gaming systems, which is having demand. The sales of notebook PCs has jumped 16% in the latest period, and the company has gained traction in gaming with its OMEN line of gaming products, for example. Although the global PC shipments has declined 1.5% for all suppliers, as per the research firm International Data Corp.
Moreover, HPQ is trying to innovate to spur growth in printers, a business that broadly has been in decline. The company has invented a palm-sized printer, called the Sprocket, targeted to younger consumers that is designed to pair with smartphones.
In addition, HPQ is in track to acquire Samsung’s printing business that will help to accelerate our A3 portfolio. The transaction is expected to close in the second half of 2017, subject to regulatory approval and other customary closing conditions.
For the second quarter 2017, HPQ expects the non-GAAP earnings per share to be in the range of $0.37 to $0.40 while the analysts’ are expecting the earnings per share of $0.38. Further, HPQ is expecting that the free cash flow could be at the higher end of the range of $2.3 billion to $2.6 billion free cash flow outlook for the year.
HPQ stock has risen 56.98% in a year (source: Google Finance). According to tipranks.com, 8 analysts has covered the stock while recommending a “Moderate Buy”. HPQ has an average price target of $18.86, which is a further upside of 16.42%.