HP (HPQ) Down 3.5% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for HP (HPQ). Shares have lost about 3.5% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is HP due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers. HP’s Q4 Earnings & Revenues Miss EstimatesHP Inc.’s third-quarter fiscal 2024 non-GAAP earnings of 93 cents per share missed the Zacks Consensus Estimate by 1.1%. The bottom line rose 3.3% year over year and came within the company’s guidance of 89-99 cents.HPQ’s net revenues of $14.06 billion marginally missed the Zacks Consensus Estimate by 0.36%. The figure improved 1.7% from the prior-year quarter’s level of $13.8 billion. The better-than-expected top-line performance reflected benefits driven by steady progress in Personal Systems and Print.HP’s Q4 DetailsPersonal Systems (PS) revenues (68.2% of net revenues) came in at $9.6 billion, which improved 2.1% from the year-ago quarter’s figure (2.6% up at cc). The growth in this division was mainly due to revenue growth from commercial unit performance and market share gains in Personal Systems.HP’s total PC units sold were up 1% on a year-over-year basis, mainly driven by a 4% increase in Commercial PS shipments, offset by a decline of 3% in Consumer PS shipments. Revenues from the Commercial PS segment increased 5% year over year, while the Consumer PS segment sales declined 4%.The printing business’ revenues (31.7% of net revenues) increased 0.8% year over year (up 1.5% at cc) to $4.45 billion. The Print business saw growth for the first time in the past 12 quarters, mainly driven by improvement in Consumer Printing and Supplies, partially offset by a decline in Commercial Printing.Consumer Printing net revenues improved 3%, while Commercial Printing net revenues declined 1%. Supplies net revenues were up 2% (up 3% in constant currency) year over year. Total hardware units increased 9.5% overall.On a reported basis, region-wise, the Americas rose 2.5% and the EMEA region witnessed growth of 2.1% in revenues. The Asia Pacific and Japan revenues grew 0.6% year over year.Operating ResultsSegment-wise, PS’ non-GAAP operating margin contracted 100 basis points (bps) to 5.7%. The decline was due to headwinds from higher commodity costs and investment in strategic initiatives.The Printing division’s non-GAAP operating margin expanded 70 bps to 19.6%.HP’s overall non-GAAP operating margin from continuing operations of 8.5% contracted 50 bps year over year.Balance Sheet and Cash FlowThe company ended the fiscal fourth quarter with cash, cash equivalents and restricted cash of $3.25 billion, down from $3.73 billion at the end of the previous quarter.During the quarter, HPQ generated $1.62 billion worth of cash from operational activities and $1.5 billion in free cash flow. HP returned $1.2 billion to its shareholders in the form of share repurchases and cash dividends.GuidanceFor the first quarter of fiscal 2025, the company estimates non-GAAP EPS between 70 cents and 76 cents (midpoint 73 cents).For fiscal 2025, the company expects its non-GAAP EPS between $3.06 and $3.36 (midpoint $3.21).HPQ expects its free cash flow in the range of $3.2-$3.6 billion for fiscal 2025.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a downward trend in fresh estimates.The consensus estimate has shifted -14.45% due to these changes.VGM ScoresCurrently, HP has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, HP has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.Free: 5 Stocks to Buy As Infrastructure Spending SoarsTrillions of dollars in Federal funds have been earmarked to repair and upgrade America’s infrastructure. In addition to roads and bridges, this flood of cash will pour into AI data centers, renewable energy sources and more.In, you’ll discover 5 surprising stocks positioned to profit the most from the spending spree that’s just getting started in this space.Download How to Profit from the Trillion-Dollar Infrastructure Boom absolutely free today.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report HP Inc. 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