HP (HPQ) is set to report earnings after the close of regular market trading today, and given the moribund state of the personal computer and printer markets, most analysts are expecting an equally moribund report tonight from the company.
Wall Street analysts expect HP to report earnings of $0.44 per share on revenues of $11.47 billion for the July quarter. For the current quarter ending in October, the Street is expecting earnings of $0.41 per share on revenues of $11.8 billion.
In June, HPQ raised guidance for the July quarter and guided the Street to between earnings of $0.43 and $0.46 per share.
Market research firms like Gartner and IDC have forecast PC unit sales to drop about 10% to 14% in 2016, depending on which report one is reading, and a pretty similar decline in the printer segment as well.
With everyone waxing negative on the PC manufacturer segment, could there be a contrarian play in HPQ?
A recent report from Morgan Stanley stated that it expects the notebook segment to actually show growth in the calendar third quarter based on earnings reported by the segment supply chain in calendar 2Q.
Morgan Stanley expects notebook shipments from the likes of Dell and HP could actually rise by 9% quarter on quarter, which implies, according to the report, a 12% month-on-month increase for August followed by an even bigger month-on-month increase of 22% for September.
The only fly in the HPQ ointment could be the fact that shares have rallied just over 25% in the last couple of months.
Having said that, given the fact that HPQ shares currently trade at barely 9x estimated earnings of $1.61 per share for fiscal 2017, a few positive comments and even a slight guide higher could mean greater gains for investors.
Good luck going into HP's earnings tonight, whichever way you are positioned, good guy or dark-sider.