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HP shocks Wall Street, blows away earnings estimates

Brian Sozzi
·Editor-at-Large
·2-min read
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Computing and printing giant HP (HPQ) sure dialed up the growth in its most recent quarter.

Powered by consumers continuing to invest in work-from-home tech gear during the COVID-19 pandemic, HP blew away Wall Street sales and profit forecasts Thursday after the close. The company also shared upbeat guidance for its fiscal year, which may trigger a good number of upward revisions to analyst profit estimates and stock price targets in the coming days.

"What we are seeing is very strong demand for our products in the PC space and in the printing space, especially at home," HP CEO Enrique Lores told Yahoo Finance.

Here is how HP performed in its fiscal first quarter compared to Wall Street estimates.

  • Total Sales: $15.6 billion vs. $14.97 billion

  • Personal System Segment Sales: $10.6 billion vs. $10.33 billion

  • Printing Segment Sales: $5.0 billion vs. $4.67 billion

  • Diluted EPS: $0.92 vs. $0.66 (guidance: $0.64 to $0.70)

  • Full Fiscal Year Earnings Guidance: $3.15 to $3.25 vs. $2.65

HP's quarter highlights how the pandemic continues to weigh on the business of work.

Sales at HP’s personal systems and printing segments each rose 7% from a year ago. Sales growth was notched inside the consumer segments (up 34% for personal systems, and up 18% for printers) of each division, reflecting consumers buying notebook computers and printers to work from home.

Meanwhile, commercial sales fell 6% inside the personal systems segment while they were unchanged in the printer business. The mixed results here reflect workers having migrated from offices where large printers and desktops reign supreme — hence less desire by businesses to buy new hardware.

Operating profit margins at the personal systems and printer segments rose 200 and 500 basis points, respectively, versus a year ago.

What investors will likely watch for next is any financial impact to PC makers like HP from the yawning chip supply shortages. HP relies on Intel and AMD for its chips. Lores says the shortages are being fueled by strong demand for computing equipment.

"We provided very strong guidance for the second quarter and for the rest of the year. And this shows that even if there will be shortages, we are going to continue to grow. We are going to continue to be able to meet the majority of customer needs."

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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