HP Inc., the PC and printer company, has revealed its long-term forecast for annual revenue growth and earnings per share (EPS). During a meeting with securities analysts in Palo Alto, California, the company stated that it anticipates a 2% to 4% increase in revenue year over year. Additionally, HP expects high single-digit percentage growth for EPS.
Positive Market Response
Following this announcement, HP’s stock (ticker: HPQ) experienced a 2.4% surge, reaching $27.05 in late trading. The market responded favorably to the company’s optimistic outlook.
Strong Focus on Free Cash Flow
HP also highlighted its commitment to free cash flow growth in parallel with profit expansion. The company underscored its intention to return 100% of free cash to shareholders through dividends and stock repurchases.
Increased Dividend Rate
To further demonstrate its dedication to shareholders, HP announced a 5-cent increase in its dividend rate on an annualized basis. The new rate is set at $1.10 per share, up from $1.05. Currently, HP’s stock offers a yield of over 4%.
Fiscal Year 2024 Projections
Looking ahead to the fiscal year ending in October 2024, HP projects non-GAAP (Generally Accepted Accounting Principles) profits ranging from $3.25 to $3.65 per share. Meanwhile, earnings under generally accepted accounting principles are estimated to fall between $2.75 and $3.15 per share. Analysts had previously estimated non-GAAP profits of $3.48 per share for fiscal 2024, which represents an increase from the anticipated $3.30 per share in fiscal 2023.
Strong Cash Flow and Optimistic Outlook
HP believes it will generate free cash flow between $3.1 billion and $3.6 billion for fiscal year 2024. CFO Marie Myers expressed confidence in the company’s second-half revenue growth, expecting it to surpass the first-half performance. This optimistic outlook is bolstered by HP’s anticipation of an improvement in personal computer demand.
Cost Savings and Containment Plan
Furthermore, HP disclosed that it aims to achieve $1.6 billion in annualized run rate cost savings by the end of fiscal year 2025 through its cost containment plan. This target exceeds the previously announced goal by $200 million.
HP Inc.’s long-term revenue growth forecast and commitment to shareholder value have generated positive market sentiment. With anticipated improvements in personal computer demand and strategic cost containment measures, the company is poised for continued success.
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