HP Q4 Results Beat Estimates; Issues Guidance

HP (HP) delivered stronger-than-expected fiscal Q4 2021 results on the back of an exceptional year of growth. The company posted double-digit revenue, operating profit and earnings per share (EPS) growth. It also returned a record amount of capital to shareholders. HP shares rose 0.81% to close at $32.19 on November 23.

HP is a U.S. company that specializes in the development and distribution of personal computing and other devices, imaging and printing products. The company was formed in 2015, following the split of the Hewlett Packard Company.

Q4 Results

Revenue in the quarter was up 9.3% year-over-year to $16.7 billion, exceeding consensus estimates of $15.43 billion. Personal systems revenue was up 13% compared to the same quarter last year, to $11.8 billion, as Consumer PCs net revenue fell 3% and Commercial PC’s net revenue increased 25% year-over-year. Printing net revenue increased 1% year-over-year to $4.9 billion.

Non-GAPP net EPS landed at $0.94 compared to $0.62 delivered the same quarter last year, and above consensus estimates of $0.89. During the quarter, HP generated $0.9 billion free cash flow. (See Top Smart Score Stocks on TipRanks)

Additionally, the company returned $2 billion to shareholders, comprised of $1.8 billion in stock repurchases and a cash dividend of $219 million. Consequently, HP returned 210% of its fourth-quarter free cash flow, exiting the quarter with $4.3 billion in gross cash.

Q1 Outlook

For fiscal Q1 2022, HP expects diluted net EPS in the range of $0.99 and $1.05. For the full-year, it expects earnings to range between $4.07 and $4.27 a share. The company also expects free cash flow to land at $4.5 billion.

Stock Rating

In early November, Loop Capital Markets analyst Ananda Baruah reiterated a Buy rating on the stock and increased the price target to $50 from $40, implying 55.33% upside potential to current levels. According to Baruah, HP is well-positioned to see strong revenue growth in 2022, backed by attractive buybacks and dividend payouts.

Consensus among analysts is a Hold based on 2 Buys, 3 Holds, and 2 Sells. The average HP price target of $33.29 implies 3.42% upside potential to current levels.

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