HP Inc. shares sink as company navigates economic challenges with a steady Q1 performance
HP Inc. (NYSE: HPQ) dropped its Q1 financials for fiscal 2024 Wednesday after hours, showcasing its steadfastness amid global economic turbulences. With a slight dip in net revenue by 4.4% to $13.2 billion from the year-ago period, HP still managed to elevate its GAAP diluted EPS to $0.62 and its non-GAAP diluted EPS to $0.81. These figures reflect the company's prowess in upholding profitability and efficiency despite prevailing market adversities.
Since diverging from Hewlett Packard Enterprise in 2015, HP Inc. has solidified its stance in the commercial sector, alongside maintaining a robust portfolio in consumer devices and printers. The company enjoys a widespread international market presence, with a significant portion of its sales generated outside the U.S., heavily depending on channel partners for its sales force and completely externalizing its manufacturing process.
Noteworthy is HP's EPS growth within the competitive hardware landscape, where maintaining margins and fostering innovation are crucial. HP's commitment to delivering shareholder value is evident through its capital returns, even amidst revenue contraction.
The financials detail a GAAP operating margin of 7.1%, up by 1.7 percentage points year over year, and a non-GAAP operating margin of 8.4%, a 0.8-point increase. The balance sheet highlights $2.4 billion in gross cash at quarter's end, with the cash flow statement revealing $25 million in free cash flow, after adjustments for operating activities and investments.
These key financial indicators—operating margin and free cash flow—underscore HP's operational effectiveness and liquidity, vital for ongoing operations and potential expansion.
Segment-wise, Personal Systems net revenue declined by 4% to $8.8 billion, and Printing net revenue decreased by 5% to $4.4 billion. Looking ahead, HP forecasts its fiscal 2024 second quarter GAAP diluted EPS to range between $0.58 and $0.68, and its non-GAAP diluted EPS between $0.76 and $0.86.
HP Inc.'s Q1 outcomes signal its agility and strategic finesse in navigating economic shifts, ensuring profitability and operational integrity. With a strategic eye on innovation and market share, HP is poised for growth, banking on its commercial market dominance, global footprint, and innovation-driven ethos as the economy begins to rebound.