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How HP Aims to Improve Shareholder Value

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Revenue growth

In this series, we’ve seen that analysts expect HP Inc.’s (HPQ) revenue to rise 6.4% YoY (year-over-year) in fiscal 1Q18 to $13.5 billion and 3.8% YoY to $54 billion in fiscal 2018. HP expects profitability to be impacted by a rise in component costs in 1Q18 and competitive repricing that’s likely to offset currency tailwinds.

HP CEO Dion Weisler stated, “Looking to 2018, we plan to introduce a new, lower-cost, full-color system allowing us to expand into new markets. We believe that Multi Jet Fusion will be the only 3D printing technology in the industry that can make mechanically robust, fully functional color parts. Not only are we leaders in polymers, but we are going to disrupt 3D printing with metals.”

HP’s management is satisfied with its revenue, profitability, and cash flow growth in fiscal 2017. HP’s cash flow from operations was $680 million in fiscal 4Q17 and $3.7 billion in fiscal 2017.

Dividends and share repurchases

HP returned $722 million to shareholders in the form of share repurchases and dividends in 4Q17. For fiscal 2017, the firm returned $2.3 billion or 69% of free cash flow—at the higher end of the company’s free cash flow target of 50% to 75%.

HP has a dividend yield of 2.6% or $2.24 per year. Peers Apple (AAPL), Western Digital (WDC), and Seagate Technology (STX) have dividend yields of 1.6%, 2.2%, and 6.7%, respectively. HP plans to update its outlook for fiscal 2018 after including the impact of Samsung’s Printing business acquisition. HP expects incremental revenue of $1.4 billion in A4 and has estimated non-GAAP (generally accepted accounting principles) EPS (earnings per share) to rise by $0.01.

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