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Can HP Inc. Beat Its Earnings Estimates in Fiscal Q2 2018?

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Part 2
Can HP Inc. Beat Its Earnings Estimates in Fiscal Q2 2018? PART 2 OF 8

HP Inc.’s Revenue Growth Expected to Continue in Fiscal 2018

Analysts estimate revenue growth of 8.7% in fiscal 2018

Previously in this series, we learned that analysts expect HP Inc.’s (HPQ) revenues to rise ~9.5% YoY (year-over-year) in the fiscal second quarter. The company’s earnings per share are expected to rise ~20.0% in the quarter.

Analysts expect HP Inc.’s revenues to rise 6.7% YoY to ~$13.9 billion in the fiscal third quarter and 9.2% YoY to ~$14.6 billion in the fiscal fourth quarter. Its revenues are expected to rise 8.7% YoY to $56.6 billion in fiscal 2018 and 0.6% YoY to ~$56.9 billion in fiscal 2019.

HP Inc.’s Revenue Growth Expected to Continue in Fiscal 2018

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HP Inc.’s non-GAAP1 earnings per share are expected to rise 14.0% to $0.49 in the fiscal third quarter, 18.0% to $0.52 in the fiscal fourth quarter, and ~19.4% to $1.97 in fiscal 2018. Its earnings per share are expected to rise ~5.0% to $2.07 in fiscal 2019. A rise in revenues during fiscal 2018 and fiscal 2019 could drive HP Inc.’s profit margins upward.

Analysts expect Western Digital (WDC), NetApp (NTAP), and Seagate (STX) to see their revenues rise 7.5%, 6.4%, and 1.2%, respectively, in fiscal 2018.

Earnings and operating profit

HP Inc.’s profit margin rose more slowly than its revenue growth in fiscal 2017, and this trend is expected to reverse in fiscal 2018. HP Inc.’s earnings per share are expected to increase at a compound annual growth rate of 9.1% over the next five years.

In fiscal 2017, HP reported EBITDA of ~$4.2 billion, up 2.5%. Its operating profit rose 1.8% to ~$3.8 billion, compared to revenue growth of less than 8.0%.

Analysts expect HP Inc.’s EBITDA to rise, increasing 9.2% in fiscal 2018, 1.9% in fiscal 2019, and 3.6% in fiscal 2020. The company’s operating profit is also expected see continued increases, rising 7.2% in fiscal 2018, 3.2% in fiscal 2019, and 1.0% in fiscal 2020.

  1. generally accepted accounting principles
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