HP Inc. (HPQ) Drops 2.71% After Earnings, EPS Tops Expectations and Sales Beat Consensus

2025-11-26 · Stocks · QuoteReporter

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HP Inc. (HPQ) Drops 2.71% After Earnings, EPS Tops Expectations and Sales Beat Consensus

HP Inc. is a prominent information technology company founded in 1939 by William R. Hewlett and David Packard. Based in Palo Alto, California, HP specializes in a wide range of personal computing devices, imaging, and printing products. The company operates through three main segments: Personal Systems, Printing, and Corporate Investments, which includes HP Labs and various business incubation projects. HP serves both commercial and consumer markets globally.

HP Inc. (HPQ) has recently announced plans to cut up to 6,000 jobs as part of a broader strategy to achieve $1 billion in savings, largely driven by implementing artificial intelligence (AI) technologies. This decision comes in response to rising memory costs, which have significantly impacted the company’s financial outlook, as highlighted in their latest quarterly reports. Despite these challenges, HP managed to surpass Q4 earnings estimates with a year-over-year increase in revenues.

The company’s efforts to mitigate the rising memory chip costs are expected to stabilize by the second half of 2026. However, in the short term, the job cuts and cost-saving measures may lead to uncertainties about HP’s operational capabilities and could potentially affect employee morale and productivity. Investors and stakeholders are closely monitoring how these strategic decisions will influence HP’s market position and financial health in a competitive and rapidly evolving tech landscape.

The current price of the asset at $23.685 shows a significant decline today, down by 2.71%. This drop is part of a broader negative trend, as illustrated by the asset’s performance relative to its moving averages and other key metrics. The price is currently well below its 20-day, 50-day, and 200-day moving averages by approximately 5.06%, 10.39%, and 10.63% respectively, indicating a bearish momentum over both short and long terms.

The asset’s price is also considerably lower than its 52-week and year-to-date highs, down by 38.08% and 30.73% from those peaks, respectively. This highlights a significant pullback over the past year and since the start of the year. However, it has recovered somewhat from its 52-week and year-to-date lows, suggesting some resilience.

The technical indicators further reinforce the bearish outlook. The Relative Strength Index (RSI) at 39.01 indicates that the asset is nearing oversold territory, but isn’t there yet. The MACD at -0.93 suggests a strong downward momentum. Given these factors, the asset appears to be in a downtrend with potential for further declines unless there’s a significant shift in market conditions or investor sentiment.

HP Inc. (NYSE: HPQ) disclosed its fiscal 2025 results, revealing a mixed financial performance with a slight increase in revenue but a decline in earnings per share (EPS). For the full year, HP reported a revenue of $55.3 billion, marking a 3.2% increase from the previous year’s $53.6 billion. However, GAAP diluted net EPS fell by 5.7% to $2.65, and non-GAAP diluted net EPS decreased by 9.0% to $3.12. The company’s operating margins also saw reductions, with GAAP operating margin dropping to 5.7% and non-GAAP margin to 7.4%.

In the fourth quarter alone, revenue rose by 4.2% year-over-year to $14.6 billion. Q4 GAAP diluted net EPS was $0.84, down 9.7%, and non-GAAP diluted net EPS was $0.93, down 3.1%. The operating margins for the quarter similarly declined.

HP generated $3.7 billion in net cash from operating activities for the year and returned $1.9 billion to shareholders through dividends and stock repurchases. Looking ahead to fiscal 2026, HP anticipates GAAP diluted net EPS between $2.47 and $2.77 and non-GAAP diluted net EPS between $2.90 and $3.20, with projected free cash flow between $2.8 billion and $3.0 billion. The company also announced a strategic initiative focusing on artificial intelligence, expected to achieve significant cost savings by fiscal 2028.

Earnings Trend Table

The EPS (Earnings Per Share) data over the observed quarters shows a fluctuating trend with occasional alignment between estimated and reported EPS. Notably, in Q4 of both 2023 and 2024, the reported EPS perfectly matched the estimates, indicating accurate forecasting or stable performance during these periods, with virtually zero surprise percentage.

However, there are instances of significant discrepancies. For example, in Q2 of 2025, the reported EPS of 0.71 fell notably short of the estimate of 0.80, resulting in a surprise percentage of -11.69%. This suggests either unexpected challenges during that quarter or overly optimistic estimations. Similarly, Q3 of 2024 also saw a reported EPS of 0.83 against an estimate of 0.86, underperforming by -3.47%.

Conversely, there were quarters like Q2 of 2024 and Q4 of 2025 where the reported EPS slightly exceeded expectations, with surprise percentages of 1.02% and 2.20%, respectively. These instances could indicate better-than-expected performance or conservative estimates.

Overall, while there are quarters of precise forecasting, the variability in surprise percentages suggests fluctuating operational performance or estimation challenges.

Dividend Payments Table

The dividend data provided reveals a consistent pattern in the payout trends over the specified periods. From December 2023 through June 2024, dividends were maintained at $0.276. This consistency indicates a stable payout policy during these quarters. Starting from September 2024, there was a noticeable increase in the dividend amount to $0.289, which has been maintained through to September 2025.

This increment suggests a positive adjustment in the company’s dividend policy, possibly reflecting an improved financial performance or a strategic decision to return more capital to shareholders. The maintenance of the increased dividend rate across four consecutive quarters from September 2024 to September 2025 underscores a sustained confidence in the company’s financial health and a commitment to providing shareholders with consistent returns.

Overall, the trend indicates a stable and possibly optimistic financial outlook, with the company showing both consistency in its dividend payments and a willingness to increase payouts when possible. This could be seen as a positive signal to investors looking for stable income streams combined with potential growth in payout amounts.

The most recent rating changes for the stock in question reflect varied sentiment and adjustments in target prices from notable financial firms, indicating a dynamic and possibly uncertain outlook for the company.

1. TD Cowen – November 26, 2025: TD Cowen reiterated its ‘Hold’ rating but adjusted the target price from $28 to $26. This revision suggests a slightly reduced expectation of the stock’s performance, possibly due to recent company-specific or macroeconomic factors that could impact its future earnings potential.

2. Morgan Stanley – November 17, 2025: Morgan Stanley issued a downgrade from ‘Equal-Weight’ to ‘Underweight’, not specifying a new target price. This significant change indicates a bearish outlook, suggesting that Morgan Stanley analysts might anticipate underperformance relative to the industry or broader market, potentially due to deteriorating fundamentals or heightened risks.

3. JP Morgan – October 22, 2025: JP Morgan downgraded the stock from ‘Overweight’ to ‘Neutral’ with a target price of $30. This move signals a shift from a bullish to a neutral stance, implying that the stock might now be seen as fairly valued, with less upside potential compared to earlier assessments.

4. HSBC Securities – October 14, 2025: HSBC Securities upgraded the stock from ‘Hold’ to ‘Buy’ with a target price set at $30. This upgrade suggests a positive change in the stock’s outlook, with HSBC analysts possibly identifying new growth drivers or operational improvements that could enhance the stock’s value in the near future.

These rating changes reflect a mix of optimism and caution, with significant downgrades juxtaposed against a notable upgrade, illustrating the complex and varied perspectives analysts hold on the stock’s future trajectory.

The current price of the stock is $23.68, which is below the average target price indicated by recent analyst ratings. The most recent target prices set by analysts range from $26 to $30, suggesting a potential upside from the current market price. Specifically, TD Cowen has a target price of $26 after a recent adjustment from $28, indicating a hold status. HSBC Securities is more optimistic, upgrading their rating to buy with a target price of $30. Conversely, JP Morgan downgraded their rating to neutral with the same target price of $30, while Morgan Stanley downgraded the stock to underweight, although they did not provide a specific target price.

This mixed sentiment among analysts reflects varying expectations about the stock’s future performance, potentially influenced by factors such as earnings per share (EPS) trends and dividend policies, although specific details on these financial metrics are not provided in the summary. The divergence in analyst opinions and target prices highlights the uncertainty and differing perspectives on the stock’s valuation and future market direction.

Disclaimer: The information provided here is for educational and informational purposes only and should not be interpreted as financial advice, investment recommendations, or trading guidance. Markets involve risk, and past performance is not indicative of future results. You should always conduct your own research and consult with a qualified financial advisor before making any investment decisions. By acting, you accept full responsibility for your choices.