HPQ is scheduled to report Q1 results tonight after the close. The current Capital IQ Consensus Estimates call for Q1 EPS of $0.36 on revenues of $12.03 billion


  • For Q1, HPQ guided on the last period earnings release for non-GAAP EPS in the range of $0.33-0.38
  • For FY16, HPQ also guided on the last period release for non-GAAP EPS in the range of $1.59-1.69
  • Guidance was provided within the press release for Q4 results last period. It remains unclear whether the company will continue this trend post-spin off

PC sales will be in focus this period under the company's ‘Personal Systems' segment. Last period, PS accounted for about 60% of total revenues (between the Printing and PC segments) at $7.69 billion. A sluggish PC market has plagued sales across the industry as of late, as segment sale aggregator Gartner noted global PC shipments were down 8% on a year-over-year basis in Q4. By comparison, IDC reported worldwide PC shipments were 71.9 million units in Q4 of 2015, down nearly -10.6% versus last year. Management noted during last quarter's earnings conference call that they expect the PC market to remain "challenging."

Printing sales will also be an area of focus in Q1 as last period, results slowed on a decline of -3.8% versus the prior year to about $4.9 billion. It's likely that pricing pressure in the segment from Japanese markets (by way of depreciation of the Yen) has persisted. Mizuho noted the downside risk to printing estimates can offset the potential upside enjoyed in PC sales.

Guidance for the coming period and FY16 could also impact the stock. Current guidance for the FY16 period comes in at EPS of $1.59-1.69. For the coming period, Mizuho sees potential upside to the revenue sentiment on the Street (they are published at $11.5 bln for Q2) and they see EPS coming in-line with Street expectations (they are published at $0.34 for Q2).

Key Points from Last Quarter:

  • Last quarter, results were still reported under the old HPQ entity -- total results were Q4 (Oct) earnings of $0.93 per share, excluding non-recurring items, $0.04 worse than the Capital IQ Consensus of $0.97; revenues fell 9.5% year/year to $25.71 bln vs the $26.72 bln Capital IQ Consensus.
    • Spun off HPQ results were for Personal systems revenues of $7.69 billion and Printing revenues of $4.9 billion
  • Co issued in-line guidance for FY16, sees EPS of $1.59-1.69 (Prior guidance $1.67-1.77) vs. $1.71 Capital IQ Consensus Estimate.