HP earnings meet expectations but stock drops on weak guidance

HP Inc., based in the United States, released its fourth-quarter results after the market closed on November 25, 2024. The company reported quarterly earnings of 93 cents per share, which aligned with the consensus estimates from analysts. Revenue for the quarter was $14.05 billion, surpassing analyst expectations of $13.99 billion and showing an increase from $13.82 billion year-over-year. The strong performance reflected HP's continued recovery in its business sectors, particularly in Personal Systems and Print, as stated by CEO Enrique Lores. In addition to its earnings report, HP disclosed important figures regarding its operating activities. The company generated net cash of $1.6 billion from its operations during the fourth quarter. Accounts receivable at the end of the quarter reached $5.1 billion, while inventory decreased to $7.7 billion, representing a positive trend in inventory management. Conversely, accounts payable increased to $16.9 billion. Moreover, HP achieved $1.5 billion of free cash flow during this period. In a notable development, HP announced a 5% increase in its annual dividend, raising its quarterly cash dividend from $0.2756 to $0.2894 per share. This move indicates the company’s commitment to returning value to shareholders, despite its cautious outlook for the future. The outlook for the first quarter of fiscal 2025 projects adjusted earnings between 70 cents and 76 cents per share, falling short of the 85 cents estimate given by analysts. For the entire fiscal year 2025, HP forecasts earnings in the range of $3.45 to $3.75 per share, while the average analyst estimate is $3.60. Following the announcement of its financial results, HP's stock took a significant hit, declining by 7.93% in after-hours trading, dropping to $36 per share. This reaction from investors highlights the market's concern regarding the company's forward guidance despite the solid quarterly results. This situation illustrates the volatile nature of stock prices in response to corporate earnings and future expectations, particularly in a challenging economic environment.