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HP Stock Fell ~12% on Weak First-Quarter Results

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HP’s stock price movement

HP Inc. (HPQ) disappointed investors with its results for the first quarter fiscal 2019, which were released on February 27 after the market bell. While earnings met the analysts’ expectations, revenues missed expectations. Following weaker-than-expected Q1 sales results, HP has lowered its GAAP earnings forecast for fiscal 2019.

The stock price of HP plummeted ~12% in the after-hours market on February 27 after closing the day at $23.85. HP stock has gained 16.6% on a year-to-date basis versus the S&P 500’s gain of only 11.4%. Stock prices of HP’s peers in the hardware industry including Hewlett Packard Enterprise (HPE), Cisco Systems (CSCO), Juniper (JNPR), and Nokia (NOK) have gained 26.4%, 20.0%, 2.06%, and 5.15%, respectively, in the same period.

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HP’s Q1 details

HP’s earnings were in line with expectations in the first quarter. Adjusted earnings of $0.52 per share were also within the company’s expectation range of $0.50 to $0.53 per share. Earnings, however, grew 8.3% YoY in the first quarter.

Revenues reached $14.7 billion in Q1, up ~1% YoY. Excluding currency, revenues increased 2% YoY in the first quarter. Revenues, however, missed the Wall Street estimates of $14.9 billion by 1% due to weaker-than-expected sales in both its personal computer and printing businesses.

Outlook

For the second quarter of fiscal 2019, HP estimates adjusted earnings to range from $0.50 to $0.53 per share. Further, for fiscal 2019, the company has reiterated its adjusted earnings guidance in the range of $2.12 to $2.22.

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