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Hewlett-Packard Had an Outstanding Performance in 3Q17

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Part 6
Hewlett-Packard Had an Outstanding Performance in 3Q17 PART 6 OF 7

Hewlett-Packard’s Cash Flow and Earnings Guidance

Cash flow

In fiscal 3Q17, Hewlett-Packard’s (HPQ) cash flow from operations was $1.8 billion and ~$3 billion since the beginning of 2017. The free cash flow in fiscal 3Q17 was $1.7 billion and $2.8 billion in 2017. Hewlett-Packard is targeting free cash flow of $3 billion in fiscal 2017. It expects capital expenditure of $500 million in the fiscal year ending in October 2017.

Hewlett-Packard’s Cash Flow and Earnings Guidance

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Capital return

In fiscal 3Q17, Hewlett-Packard returned $524 million to shareholders through dividends and share repurchases. Since the beginning of 2017, Hewlett-Packard has returned 56% of its free cash flow to shareholders, which is within its guidance of 50%–75%. The firm expects the figure to rise towards the higher end of the guidance by the end of 2017.

In fiscal 3Q17, Hewlett-Packard paid dividends of $0.13 per share or $0.52 for the year—a 2.7% yield. In comparison, the dividend yields of Hewlett-Packard’s technology, hardware, and storage peers Seagate (STX), Apple (AAPL), Western Digital (WDC), and Microsoft (MSFT) were 6%, 1.6%, 2.2%, and 2.1%, respectively.

Earnings

In fiscal 4Q17, Hewlett-Packard expects non-GAAP (generally accepted accounting principles) EPS (earnings per share) of $0.42–$0.45. For fiscal 2017, the firm expects the EPS to be $1.63–$1.66. Analysts have an average EPS estimate of $0.44 for Hewlett-Packard in fiscal 4Q17 and $1.65 for fiscal 2017. Analysts also expect Hewlett-Packard’s revenue to rise 6.6% YoY (year-over-year) in fiscal 4Q17 to $13.34 billion and 6.5% YoY to $51.38 billion in fiscal 2017.

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