HP Inc. (NYSE:HPQ) Expecting A Decline In PC Shipments For The Quarter Ended March

Over the past several years HP Inc. (NYSE:HPQ) has been dominating the PC and printing sectors globally.

HP reported 2% growth in PC sales in the recent quarter

The company is still among the leading players in the PC segment globally and in the quarter ended March, it accounted for around 21.8% of the global market. In the quarter ended in January, the company reported a YoY sales growth of 2% to $9.9 billion.

For quite some time the company has been outperforming the industry. However, despite the recent uptick in sales the coming months could be worrying for investors. According to Canalys research firm in the quarter ended March PC shipments globally dropped around 8% and HP is expected to experience a 13.8% decline.

Although there was an increase in demand in Q1 in the PC market, the supply chain problems for Intel Corp (NASDAQ:INTC) processors and closure of factories in China due to COVID-19 offset this increase. However, the research firms indicated that the possibility of a recession will lower spending and an increase in unemployment could affect consumer demand for the rest of the year.

On the other hand, the printing segment of the company experienced a 6.6% drop in sales to$4.72 billion. The printing segment has been experiencing declines in sales associated with the long upgrade cycles, increasing competition in the supplies vertical as well as low margins.

HP expects EPS of between $2.33 and $2.43 in 2020

For fiscal 2020 the company is expecting EPS of around $2.33 to $2.43 which is a 6.2% YoY earnings growth. The company’s valuation is cheap as it trades at 6.7 times its forward earnings.  Most interestingly for investors are the 4.5% dividend yield on its stock which will be appealing for investors. In the last three years, HP has been increasing its annual dividend rate at 9.5%.  

Although revenue growth has been declining the company increases its earnings. In Q1 2020 earnings grew by 25% while revenue dropped 0.6%

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