HP Q3 profit squeezed as PC segment margin thins on higher costs

HP

26/08/2026 21:27

Overview
Technology hardware maker's fiscal Q3 net earnings fell 13% compared to last year
Adjusted EPS for fiscal Q3 beat analyst expectations, helped by favorable tariff refunds
Shares of the company were down about 11% in extended trading

Outlook
HP raises FY26 GAAP diluted net EPS outlook to $2.52-$2.62, including $0.19 from tariff refunds
Company lifts FY26 non-GAAP diluted net EPS forecast to $3.19-$3.29, including $0.19 from tariff refunds
HP now expects FY26 free cash flow of $3.0-$3.2 bln

Result Drivers
PERSONAL SYSTEMS GROWTH - Co said Q3 revenue was driven by growth in Personal Systems, with commercial revenue up 22% and consumer revenue up 10%
MEMORY SUPPLY IMPROVEMENT - Co said strategy to address environmental constraints led to meaningful improvements in memory supply and higher fulfillment rates
TARIFF REFUNDS - Adjusted EPS benefited from an $0.11 favorable impact from tariff refunds

Company press release: ID:nGNX8bGmN

Key Details
Metric
Beat/Miss
Actual
Consensus Estimate
Q3 Adjusted EPS
Beat
$0.83
$0.69 (12 Analysts)
Q3 EPS
 
$0.71
 
Q3 Adjusted Net Income
Beat
$770 mln
$609.98 mln (9 Analysts)
Q3 Net Income
 
$660 mln
 
Q3 Free Cash Flow
 
$1.57 bln
 
Q3 Income from Operations 
 
$892 mln
 
Q3 Pretax Profit
 
$798 mln
 

Analyst Coverage
The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 2 "strong buy" or "buy", 11 "hold" and 6 "sell" or "strong sell"
The average consensus recommendation for the computer hardware peer group is "buy."
Wall Street's median 12-month price target for HP Inc is $25.00, about 15.3% below its August 25 closing price of $29.52
The stock recently traded at 10 times the next 12-month earnings vs. a P/E of 7 three months ago

Reuters Recommended Reads
Aug 26 - China's Huawei, US PC maker HP sign multi-year Wi-Fi patent deal
Aug 25 - Apple launches faster Mac mini, Mac Studio to tap AI boom 
Aug 25 - Hong Kong's Smart-Core Holdings interim revenue jumps on memory chip demand

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(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)