HP’s Mixed Q3 Earnings: Revenue Growth Contrasts Earnings Miss as Stock Retreats 2.3%

HP Inc. (NYSE: HPQ), renowned for its computing and printing prowess, recently released its third-quarter earnings report, leaving investors with mixed feelings and a pinch of disappointment. Following the release, HP's stock experienced a 2.3% decline in after-hours trading, highlighting the market's sensitivity to earnings expectations.

In terms of performance, HP delivered adjusted earnings per share of $0.83 for the period ending July 31, which fell short of the $0.86 consensus forecasted by analysts. Despite this setback, the company managed to surpass revenue expectations, closing at $13.52 billion—an increase of 2.4% year-over-year and above the anticipated $13.37 billion. This suggests that while HP may have stumbled with earnings, there are positives to glean from its revenue figures.

The company’s Personal Systems segment, encompassing its PCs, reported a commendable 5% rise in revenue, reaching $9.4 billion. However, the Printing segment did not fare as well, as revenues slipped by 3% to $4.1 billion. This mixed performance in core segments may give traders pause as they evaluate future growth trajectories.

Enrique Lores, President and CEO of HP Inc., expressed pride in the company’s revenue growth and highlighted recent innovations, particularly the launch of a new lineup of AI-powered PCs. "We are pleased with our return to revenue growth and proud of the innovations delivered in the quarter," he stated. However, traders will no doubt be scrutinizing whether these innovations can translate into improved bottom-line performance in the near term.

Looking ahead, HP has projected adjusted earnings per share for the fourth quarter to be in the range of $0.89 to $0.99. While this indicates optimism, it hovers just below the analysts’ expectation of $0.95. Furthermore, the firm reiterated its full-year 2024 adjusted EPS guidance, now narrowed to between $3.35 and $3.45, which also lands slightly below consensus at $3.45. This cautious forecast might raise eyebrows among traders who are gauging HP's potential for growth against market instability.

On a more positive note, HP generated $1.3 billion in free cash flow over the quarter and returned a hefty $0.9 billion to its shareholders through dividends and share buybacks. Additionally, the company has bolstered its share repurchase program, now authorized at an impressive $10 billion. has managed to return to revenue growth, the earnings miss and cautious guidance might temper investor enthusiasm.