HPQ's Q1 Earnings Surpass Expectations, Revenues Rise Y/Y

HP Inc. HPQ reported first-quarter fiscal 2026 earnings of 81 cents per share, which beat the Zacks Consensus Estimate by 5.2%. The company reported earnings of 74 cents per share a year ago. These figures are adjusted for non-recurring items.

HP’s earnings surpassed the Zacks Consensus Estimate in two of the trailing four quarters, while matching the same on one occasion and missing once, the average negative surprise being 1%.

HPQ posted revenues of $14.4 billion for the first quarter of fiscal 2026, which increased 6.7% year over year and surpassed the Zacks Consensus Estimate by 1.22%. This compares with $13.5 billion of revenues reported in the year-ago quarter.

HPQ’s Q1 Results in Detail

Personal Systems (PS) revenues (71.5% of net revenues) came in at $10.3 billion, up 11% year over year (9% in constant currency). Growth was driven by strength in both commercial and consumer PC divisions. Moreover, the company expects the Windows 11 refresh cycle and growing demand for AI PCs to be a major tailwind for 2026.

HP Inc. Price, Consensus and EPS Surprise

HP Inc. price-consensus-eps-surprise-chart | HP Inc. Quote

HP’s total PC units rose 12%, with Consumer PS shipments up 14% and Commercial PS shipments up 11%. On the revenue side, Consumer PS grew 16%, while Commercial PS rose 9%.

The Printing business (29.2% of net revenues) generated $4.2 billion, down 2% year over year (down 3% in constant currency). Consumer Printing revenues fell 8%, Commercial Printing declined 3%, and Supplies revenues decreased 1% (2% in CC). Total hardware units were down 6%, with both Consumer and Commercial units declining.

By geography, HP posted revenue growth in all regions. On a constant currency basis, the Americas rose 1%, EMEA was up 5%, and Asia Pacific & Japan grew 13% year over year.

In the first quarter of fiscal 2026, HPQ posted a gross margin of 19.6%, reflecting an increased mix from Personal Systems, higher costs of commodity and trading operations, partly offset by HPQ’s pricing and cost reduction measures.

HPQ posted a non-GAAP operating margin of 6.9%, down 40 basis points year over year.

Balance Sheet and Cash Flow

HP ended the fiscal first quarter with $3.2 billion in cash, cash equivalents and restricted cash, down from the previous quarter’s $3.7 billion.

During the quarter, HP generated $383 million of cash from operating activities and delivered $175 billion in free cash flow. During the quarter, the company returned $600 million to shareholders through dividends and share repurchases.

HPQ’s Guidance for Q2 and FY26

HPQ still expects its fiscal 2026 non-GAAP earnings to be in the range of $2.90 to $3.20, unchanged from the previous quarter’s projections. The Zacks Consensus Estimate for HPQ’s fiscal 2026 earnings is pegged at $2.95, indicating a year-over-year decline of 5.5%.

The Zacks Consensus Estimate for HPQ’s Fiscal 2026 revenues is pegged at $55 billion, indicating a year-over-year decline of 0.1%.

HPQ expects its second-quarter fiscal 2026 non-GAAP earnings per share to be in the range of 70 cents and 76 cents. The Zacks Consensus Estimate for HPQ’s second-quarter fiscal 2026 earnings is pegged at 72 cents per share, indicating a year-over-year increase of 1.4%.

The Zacks Consensus Estimate for HPQ’s second-quarter fiscal 2026 revenues is pegged at $13.4 billion, indicating a year-over-year increase of 1.44%.

Zacks Rank

HPQ currently carries a Zacks Rank #4 (Sell).

Stocks to Consider

Some better-ranked stocks in the broader Zacks Computer and Technology sector are Micron Technology MU, Credo Technology CRDO, and MongoDB MDB, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Micron Technology shares have skyrocketed 308% in the past 12-month period. This company is scheduled to release second-quarter 2026 results on March 19.

Credo Technology Group shares have surged 79.4% in the past 12-month period. CRDO is set to report its third-quarter fiscal 2026 results on March 2.

MongoDB shares have returned 25.2% in the past 12-month period. MDB is scheduled to release its fourth-quarter 2026 results on March 2.

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This article originally published on Zacks Investment Research (zacks.com).

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