HP Inc.

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HP Inc. stock analysis HPQ overview
Bullish +75

HP Inc. Reports Fiscal 2026 Second Quarter Results

📈 HP Inc. reported second quarter fiscal 2026 net revenue of $14.4 billion, representing a 9.0% increase compared to the prior year.

💰 GAAP diluted net earnings per share rose to $0.49, reflecting a 16.7% year-over-year growth rate.

💹 Non-GAAP diluted net EPS increased to $0.86, surpassing the previously provided outlook range by delivering 21.1% growth from the prior period.

🔄 The company returned $374 million to shareholders through dividends and share repurchases during the quarter.

💧 Free cash flow for the second quarter amounted to $0.8 billion after adjustments for capital expenditures and lease investments.

📉 Personal Systems revenue grew 13% year-over-year to $10.2 billion, driven by a 14% rise in commercial sales despite a 7% decline in total units sold.

🖨️ Printing segment net revenue remained flat at $4.2 billion, with consumer printing revenues dropping 10% while supplies revenue increased slightly by 1%.

💼 Accounts receivable turnover decreased to 38 days, and inventory levels increased to 73 days, indicating a slight slowdown in cash conversion cycles.

📉 GAAP operating margin narrowed to 4.2% compared to the previous year's 4.9%, primarily due to rising commodity costs impacting hardware sales.

🤖 CEO Bruce Broussard highlighted continued execution of the "future of work" strategy through AI PCs, Z workstations, and HP IQ services.

📅 For the third quarter, HP estimates GAAP diluted net EPS in the range of $0.47 to $0.63 and non-GAAP diluted net EPS between $0.61 and $0.71.

🚀 The company updated its full fiscal 2026 outlook, projecting non-GAAP diluted net EPS between $2.90 and $3.10 for the year.

💰 HP expects to generate approximately $2.8 billion to $3.0 billion in free cash flow for fiscal 2026 despite excluding restructuring charges.

📉 Non-GAAP diluted net EPS estimates for the full year exclude approximately $0.65 to $0.75 per share related to various non-operating items and adjustments.

Bullish Signals
  • HP Inc. delivered strong second-quarter results with non-GAAP diluted net EPS of $0.86, representing a 21.1% increase from the prior year period.
  • Second quarter net revenue reached $14.4 billion, marking a 9.0% year-over-year growth driven by strategic execution in AI PCs and connected experiences.
  • The company successfully returned $374 million to shareholders through dividends and share repurchases while maintaining a healthy cash position of $3.7 billion at quarter end.
  • Free cash flow remained robust at $0.8 billion, demonstrating strong operating efficiency despite rising commodity costs.
  • HP updated its fiscal 2026 earnings guidance, increasing the non-GAAP diluted net EPS range to $2.90 - $3.10, reflecting management's confidence in sustained demand.
  • Personal Systems revenue grew 13% year-over-year, led by a 14% increase in Commercial PS segment revenue.
  • The Printing segment achieved an impressive 18.3% operating margin, highlighting the profitability of the supply chain business.
Risk Factors
  • Second quarter GAAP diluted net EPS of $0.49 fell below the previously provided outlook range of $0.52 to $0.58.
  • Personal Systems revenue growth was driven by a 13% increase while total units were down 7%, with specific unit declines of 8% in Consumer PS and 7% in Commercial PS.
  • Printing segment revenue was flat year over year, declining 2% in constant currency, with consumer printing revenue down 10%.
  • The company reported a contraction in GAAP operating margins, dropping 0.7 percentage points to 4.2% from the prior-year period.
  • Accounts receivable increased by 5 days quarter over quarter to 38 days, while inventory rose 5 days to 73 days, indicating potential working capital inefficiencies.
  • Fiscal 2026 guidance includes estimated non-GAAP earnings per share deductions of $0.65 to $0.75 per diluted share due to restructuring and other charges.
  • The updated fiscal 2026 outlook maintains the expectation of significant expense charges related to restructuring, acquisition and divestiture charges, and amortization of intangible assets.
Full Analysis
HP Inc. reported fiscal 2026 second quarter results on May 27, 2026, showing a net revenue of $14.4 billion, which represents a 9.0% year-over-year increase compared to the prior period of $13.2 billion. Despite this top-line growth, GAAP operating margin decreased by 0.7 percentage points to 4.2%, though non-GAAP operating margin rose slightly to 7.5%. The company generated second quarter GAAP diluted net earnings per share (EPS) of $0.49, up 16.7% from the previous year's $0.42, and non-GAAP diluted net EPS reached $0.86, a 21.1% increase from $0.71 in the prior period. Free cash flow for the quarter was reported at $0.8 billion after accounting for $170 million in capital expenditures. Operational highlights include strong growth in personal systems revenue of $10.2 billion, which increased 13% year-over-year driven by commercial PC sales up 14%, although total hardware unit sales declined by 7%. Printing segment revenue remained flat at $4.2 billion with a healthy 18.3% operating margin. Liquidity metrics showed accounts receivable days increasing to 38 and inventory days to 73, while accounts payable turnover accelerated to 151 days. The company returned $374 million to shareholders through dividends and share repurchases, reducing its outstanding share count by approximately 5.2 million shares. Looking ahead, HP updated its fiscal 2026 guidance for GAAP diluted net EPS to a range of $2.15 to $2.45, narrowing the previously estimated range which was not explicitly detailed in prior periods but implied through this update. Non-GAAP diluted net EPS guidance was raised to $2.90 to $3.10, reflecting stronger earnings expectations despite anticipated restructuring and acquisition-related charges estimated between $0.65 and $0.75 per share. The company also provided estimates for the third quarter of fiscal 2026, projecting GAAP diluted net EPS between $0.47 and $0.63. Interim CEO Bruce Broussard noted the execution of their "future of work" strategy through intelligent devices and edge AI innovations, while CFO Karen Parkhill affirmed strong earnings performance despite rising commodity costs.