HP Inc (NYSE:HPQ) announced financial results for fiscal 2016 and the fourth quarter, ended October 31, 2016.

Fiscal 2016 net revenue of $50.1 billion was down 4% from the prior-year period, up 2% when adjusted for divestitures and currency.

Fiscal 2016 GAAP diluted net earnings per share (EPS) was $1.82, up from $1.34 in the prior-year period, and below its previously provided outlook of $2.09 to $2.14. Fiscal 2016 non-GAAP diluted net EPS was $1.92, up from adjusted non-GAAP diluted net EPS of $1.84 in the prior-year period, and within its previously provided outlook of $1.90 to $1.95. Fiscal 2016 non-GAAP net earnings and non-GAAP diluted net EPS exclude after-tax costs of $176 million and $0.10 per diluted share, respectively, related to the gains on the divestitures of H3C and MphasiS, restructuring charges, amortization of intangible assets, separation costs, tax indemnification adjustments, tax settlements, acquisition and other related charges, and an adjustment to loss from equity interests.

Fourth quarter net revenue of $12.5 billion was down 7% from the prior-year period, down 2% when adjusted for divestitures and currency.

Fourth quarter GAAP diluted net earnings per share (EPS) was $0.18, down from $0.75 in the prior-year period, and below its previously provided outlook of $0.44 to $0.49. Fourth quarter non-GAAP diluted net EPS was $0.61, up from adjusted non-GAAP diluted net EPS of $0.52 in the prior-year period, and within its previously provided outlook of $0.58 to $0.63. Fourth quarter non-GAAP net earnings and non-GAAP diluted net EPS exclude after-tax costs of $733 million and $0.43 per diluted share, respectively, related to tax settlements, restructuring charges, tax indemnification adjustments, separation costs, gains on the divestitures of H3C and MphasiS, amortization of intangible assets, acquisition and other related charges, and an adjustment to loss from equity interests.

“FY16 was a historic year for Hewlett Packard Enterprise,” said Meg Whitman, President and CEO of Hewlett Packard Enterprise. “During our first year as a standalone company, HPE delivered the business performance we promised, fulfilled our commitment to introduce groundbreaking innovation, and began to transform the company through strategic changes designed to enable even better financial performance.”

HPE fiscal 2016 full-year and fourth quarter financial performance

*Fiscal 2015 and Q4 FY15 Non-GAAP diluted net earnings per share (EPS) and Cash flow from operations contain adjustments to give effect to the separation of the Company from HP Inc. (formerly known as Hewlett-Packard Company). The adjusted figures provide a more useful representation, as if the Company had been a stand-alone company during fiscal 2015.

Information about HPE’s use of non-GAAP financial information is provided under “Use of non-GAAP financial information” below.

Outlook

For the fiscal 2017 first quarter, Hewlett Packard Enterprise estimates GAAP diluted net EPS to be in the range of $0.03 to $0.07 and non-GAAP diluted net EPS to be in the range of $0.42 to $0.46. Fiscal 2017 first quarter non-GAAP diluted net EPS estimates exclude after-tax costs of approximately $0.39 per share, related primarily to separation costs, restructuring charges and the amortization of intangible assets.

For fiscal 2017, Hewlett Packard Enterprise estimates GAAP diluted net EPS to be in the range of $0.72 to $0.82 and non-GAAP diluted net EPS to be in the range of $2.00 to $2.10. Fiscal 2017 non-GAAP diluted net EPS estimates exclude after-tax costs of approximately $1.28 per share, related primarily to separation costs, restructuring charges and the amortization of intangible assets.

Fiscal 2016 fourth quarter segment results

  • Enterprise Group revenue was $6.7 billion, down 9% year over year, down 3% when adjusted for divestitures and currency, with a 13.2% operating margin. Servers revenue was down 7%, down 6% when adjusted for divestitures and currency, Storage revenue was down 5%, down 3% when adjusted for divestitures and currency, Networking revenue was down 34%, flat when adjusted for divestitures and currency, and Technology Services revenue was down 4%, up 2% when adjusted for divestitures and currency.
  • Enterprise Services revenue was $4.7 billion, down 6% year over year, down 2% when adjusted for divestitures and currency, with a 10.7% operating margin. Infrastructure Technology Outsourcing revenue was down 7%, down 5% when adjusted for divestitures and currency, and Application and Business Services revenue was down 3%, up 4% when adjusted for divestitures and currency.
  • Software revenue was $903 million, down 6% year over year, flat when adjusted for divestitures and currency, with a 32.1% operating margin. License revenue was down 5%, down 1% when adjusted for divestitures and currency, support revenue was down 7%, up 1% when adjusted for divestitures and currency, professional services revenue was down 7%, down 4% adjusted for divestitures and currency, and software-as-a-service (SaaS) revenue was down 1%, up 11% adjusted for divestitures and currency.
  • Financial Services revenue was $814 million, up 2% year over year, net portfolio assets were up 4%, and financing volume was down 4%. The business delivered an operating margin of 10.2%. (Original Source)

Shares of HP are down nearly 3% to $15.54 in after-hours trading. HPQ has a 1-year high of $16.19 and a 1-year low of $8.91. The stock’s 50-day moving average is $15.09 and its 200-day moving average is $13.66.

On the ratings front, HPQ stock has been the subject of a number of recent research reports. In a report issued on November 17, Merrill Lynch analyst Wamsi Mohan reiterated a Buy rating on HPQ, with a price target of $17, which represents a potential upside of 6% from where the stock is currently trading. Separately, on November 14, Credit Suisse’s Kulbinder Garcha reiterated 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, Wamsi Mohan and Kulbinder Garcha have a yearly average return of 0.8% and 7.8% respectively. Mohan has a success rate of 51% and is ranked #2029 out of 4235 analysts, while Garcha has a success rate of 61% and is ranked #234.

Overall, 7 research analysts have assigned a Hold rating and 8 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $16.67 which is 3.8% above where the stock opened today.

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.