Personal computing and printing giant HP recently announced its fourth-quarter 2025 results, surpassing Wall Street’s profit expectations. The company’s revenue climbed by 6.9% year-over-year, reaching $14.44 billion, with non-GAAP earnings per share reported at $0.81, exceeding analyst estimates by 5.3%.
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Revenue: $14.44 billion (up 6.9% year-on-year, also 3.2% above the analyst estimate of $13.99 billion)
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Adjusted EPS: $0.81 (5.3% above the analyst expectation of $0.77)
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Adjusted EBITDA: $1.16 billion, matching analyst predictions, with an 8% margin, slightly above expectations.
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Management reiterated full-year adjusted EPS guidance at $3.05.
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Operating profit margin: 5.3%, a decrease from 6.3% in the previous year.
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Free cash flow margin: stable at 1%, the same as the previous year.
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Market capitalization: $16.85 billion.
Bruce Broussard, HP’s interim CEO, expressed satisfaction with the company’s strong first quarter, particularly highlighting growth in personal systems and gains in AI PCs. He mentioned that their performance reflects the strength of their offerings and strategic execution amid industry challenges.
Founded in 1939 by Bill Hewlett and Dave Packard from a garage in Silicon Valley, HP designs and sells various technology products and services, catering to consumers and businesses worldwide.
Looking at a company’s long-term sales trends can reveal a lot about its quality. Any business can do well for a time, but the best ones tend to grow consistently over the years.
With $56.23 billion in revenue over the last 12 months, HP is a major player in business services, enjoying economies of scale that allow it to manage costs better than smaller competitors. That said, as they capture more of the market, achieving high growth becomes trickier. To boost sales, HP might need to fine-tune pricing strategies or explore new products and global markets.
Interestingly, looking back five years, HP’s recent revenue remained close to $56.23 billion, which suggests a lack of demand spikes — not exactly the best starting point for any analysis.
While growth expectations are crucial, a five-year look can sometimes overlook recent shifts and transformative trends in the industry. Thankfully, HP’s annual sales growth of 2.9% over the past two years outpaces the five-year average, which is a bit reassuring.
HP reported a revenue breakdown in its key areas, where Commercial Personal Systems and Commercial Printing contributed 50.2% and 29% of total revenue, respectively. In the last two years, revenue from commercial personal systems has seen an 8% yearly growth, in contrast to a 3.3% decline in commercial printing revenue.
In the latest quarter, HP notched a 6.9% year-over-year revenue increase, hitting $14.44 billion and exceeding expectations by 3.2%.
Looking forward, analysts are predicting a 2.1% sales decline over the next year, a slowdown from what we’ve seen recently, which raises some eyebrows about future demand for their products.
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Although HP has remained profitable over the past five years, its substantial cost base is hindering its growth. The average operating profit margin has been low at 6.9% for a business of its kind.
When examining the profitability trends, HP’s operating margin has dipped by 2.7 percentage points over the last five years, which suggests rising costs that haven’t been offset via pricing changes.
During the latest quarter, HP’s operating margin was reported at 5.3%, which represents a slight decrease from the previous year but indicates a relatively stable cost structure overall.
Tracking long-term earnings per share (EPS) helps assess whether a company’s growth is truly profitable. HP’s EPS has increased at a compound annual growth rate of 4.7% over the past five years, which, although better than stagnant revenue, doesn’t necessarily point to strong operational quality given stagnant margins.
By delving deep into HP’s earnings, we can gain better insights into its performance. Over the last five years, HP has repurchased shares, resulting in a 27.9% reduction in share count. This points to EPS growth that hasn’t stemmed from operational advancements but from financial maneuvers.
Like earnings, it’s useful to analyze EPS in the short term to catch any shifts in business dynamics.
For HP, the two-year drop in EPS by 2.6% signifies continued underwhelming performance. Analyzing the data reveals consistent challenges.
In the fourth quarter, HP posted adjusted EPS of $0.81, an increase from the previous year’s $0.74, which outperformed analyst expectations by 5.3%. However, forward-looking Wall Street estimates predict a contraction in HP’s full-year EPS by 9.4% to $3.20.
Overall, while HP’s revenue exceeded expectations this quarter and earnings outperformed analyst predictions, the lower EPS guidance for the next quarter raised some concerns. The market appeared to expect more, leading to a 5.4% drop in stock price to $17.21 post-results.
So, is HP a good investment opportunity right now? While recent quarterly performance is significant, the long-term quality and valuation of the business are ultimately what matter most. Our detailed research report elaborates on this topic; it’s available for free..
