HP Inc (NYSE:HPQ) provided details on its strategy and opportunities for long-term growth, coupled with its financial outlook for FY17.
“I’m proud of the progress we have made in our first year as the new HP. Our focus is clear, our execution is solid, and we are positioned well for the next step in our journey,” said Dion Weisler, President and CEO, HP. “We are confident in our strategy and believe it will continue to produce reliable returns and cash flow, while also enabling HP to invest in differentiated innovation and long-term growth.”
Weisler added, “Although our markets remain very challenged, we are committed to innovating in the core and continue to see long-term growth opportunities in commercial mobility and services, the disruption of the A3 copier market, and the digitization of graphics and manufacturing through our leading 3D printing solutions.”
Fiscal 2017 outlook
For fiscal 2017, the company estimates GAAP diluted net earnings per share from continuing operations to be in the range of $1.47 to $1.57 and estimates non-GAAP diluted net earnings per share to be in the range of $1.55 to $1.65. Fiscal 2017 non-GAAP diluted net earnings per share estimates exclude after-tax costs primarily related to items such as restructuring and other charges, defined benefit plan settlement charges, non-operating retirement-related credits/(charges), tax indemnifications, net valuation allowances, separation taxes and adjustments, acquisition and other related charges, discontinued operations and amortization of intangible assets. Based on the current environment, HP anticipates generating cash flow from operations of approximately $2.8 to $3.1 billion in fiscal 2017. With about $0.5 billion in net capital expenditures, free cash flow outlook is in the range of $2.3 to $2.6 billion for fiscal 2017.
HP expects to return 50%-75% of annual free cash flow to shareholders through a combination of a robust dividend and regular share buy backs. In fiscal 2017, the company indicated that it expects to be at the higher end of that range, with a 7% increase in the planned quarterly dividend amount, and the balance returned to shareholders through share repurchases. HP also announced an increase in its share repurchase program of $3 billion.
“We are increasing our quarterly dividend as a demonstration of our confidence in our execution and the sustainability of our cash flow,” said Cathie Lesjak, Chief Financial Officer, HP. “HP continues to be a compelling investment opportunity. The combination of our recurring revenue streams, negative cash conversion cycle, and efficient operating model drives strong operating margins and cash flow.” (Original Source)
HP shares are down nearly 2% to $14.80 in after-hours trading Thursday. HPQ has a 1-year high of $15.88 and a 1-year low of $8.91. The stock’s 50-day moving average is $14.62 and its 200-day moving average is $13.17.
On the ratings front, HPQ stock has been the subject of a number of recent research reports. In a report issued on October 10, RBC analyst Amit Daryanani reiterated a Hold rating on HPQ, with a price target of $16, which implies an upside of 6% from current levels. Separately, on October 7, Credit Suisse’s Kulbinder Garcha maintained a Buy rating on the stock and has a price target of $19.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Amit Daryanani and Kulbinder Garcha have a total average return of 4.7% and 10.7% respectively. Daryanani has a success rate of 67.5% and is ranked #419 out of 4182 analysts, while Garcha has a success rate of 63% and is ranked #145.
The street is mostly Neutral on HPQ stock. Out of 14 analysts who cover the stock, 8 suggest a Hold rating and 6 recommend to Buy the stock. The 12-month average price target assigned to the stock is $15.52, which represents a slight upside potential from current levels.
HP Inc. provides products, technologies, software, solutions and services to individual consumers, small and medium-sized businesses and large enterprises, including customers in the government, health and education sectors. It operates through following business segments: Personal Systems, Printing, and Corporate Investments. The Personal Systems segment provides commercial personal computers, consumer PCs, workstations, calculators and other related accessories, software and services for the commercial and consumer markets. The Printing segment provides consumer and commercial printer hardware, supplies, media and scanning devices. Printing is also focused on imaging solutions in the commercial markets. The Corporate Investments segment includes HP Labs, the webOS business and certain business incubation projects.