HPQ Q4 Earnings Miss: Will Weak Guidance Drag the Stock Down?

Core Viewpoint - HP Inc. reported lower-than-expected fourth-quarter fiscal 2024 results, with non-GAAP earnings per share (EPS) of 93 cents, missing the Zacks Consensus Estimate by 1.1% and showing a year-over-year increase of 3.3% [1][3] Financial Performance - HPQ's revenues increased by 1.7% year over year to $14.06 billion, slightly missing the Zacks Consensus Estimate by 0.36% [2] - The Personal Systems (PS) segment, accounting for 68.2% of net revenues, generated $9.6 billion, reflecting a 2.1% year-over-year increase [4] - The printing business revenues, making up 31.7% of net revenues, rose by 0.8% year over year to $4.45 billion, marking the first growth in 12 quarters [6] Segment Analysis - Total PC units sold increased by 1% year over year, driven by a 4% rise in Commercial PS shipments, while Consumer PS shipments declined by 3% [5] - Consumer Printing net revenues improved by 3%, while Commercial Printing net revenues decreased by 1% [7] - The PS segment's non-GAAP operating margin contracted by 100 basis points to 5.7% due to higher commodity costs and strategic investments [8] - The Printing division's non-GAAP operating margin expanded by 70 basis points to 19.6% [9] - Overall, HP's non-GAAP operating margin from continuing operations contracted by 50 basis points to 8.5% [10] Cash Flow and Guidance - At the end of the fiscal fourth quarter, HPQ had cash and cash equivalents of $3.25 billion, down from $3.73 billion in the previous quarter [11] - The company generated $1.62 billion from operational activities and $1.5 billion in free cash flow during the quarter [11] - For Q1 fiscal 2025, HPQ estimates non-GAAP EPS between 70 cents and 76 cents, with the Zacks Consensus Estimate at 87 cents [12] - For fiscal 2025, the expected non-GAAP EPS range is $3.06 to $3.36, with a consensus estimate of $3.59 [12] - HPQ anticipates free cash flow between $3.2 billion and $3.6 billion for fiscal 2025 [13] Stock Performance - Following the disappointing fourth-quarter results, HPQ shares fell by 7.44% in after-market trading on November 26 [3] - Year-to-date, HPQ shares have gained 30%, outperforming the Zacks Computer - Micro Computers industry's growth of 22.2% [3]