- Revenue Growth & Share Gains: Q4 2025 revenue grew 4% YoY, with Personal Systems up 8% (driven by commercial/consumer premium PCs and workstations), marking the sixth consecutive quarter of revenue growth.
- Print Decline & Strategic Adjustments: Print revenue fell 4% due to market softness, but HP aims to outperform industry growth in 2026 via big tank, office, and 3D printing share gains, targeting low single-digit Print revenue growth.
- Cost Savings & Workforce Reductions: Surpassed $1.4B cost savings target with $2.2B in annualized gross savings, achieving $300M by 2026. Plans include $1B in savings over three years, with 4,000–6,000 workforce reductions.
- Free Cash Flow & Shareholder Returns: Generated $1.5B in Q4 free cash flow ($2.9B annually), returning $1.9B to shareholders via dividends/share repurchases, including a raised dividend of $0.30/share.
- AI & Operational Shifts: AI PC penetration exceeds 30%, with 17% internal productivity gains. HP plans AI integration into operations and a shift to recurring revenue (e.g., subscriptions, software-as-a-service) for higher-margin stability.
Segment Performance
In Personal Systems, revenue grew 8%, driven by commercial and consumer premium and workstations. The company expects revenue to be stronger in the second half of the year, driven by normal seasonality and pricing, with operating margin in the 5% to 6% range in the first half. In Print, revenue declined 4% due to market softness and delayed purchasing decisions, but HP anticipates low single-digit revenue growth, with supplies revenue down low single digits in constant currency.
Guidance and Outlook
For fiscal year 2026, HP expects Personal Systems revenue to grow low single-digit, driven by Windows 11 refresh, AIPCs, and pricing. The company aims to grow slightly faster than industry projections in Print, driven by share gains in big tanks, office, and 3D printing. HP expects to achieve $1 billion in cost savings over three years, with approximately $300 million realized by 2026, and estimates associated restructuring charges of around $650 million.
Valuation and Dividend Yield
With a P/E Ratio of 9.02 and a Dividend Yield of 4.76%, HP's valuation appears reasonable. The company's ROIC of 22.53% indicates strong profitability. The EV/EBITDA ratio of 7.3 suggests that HP's enterprise value is reasonable relative to its earnings. Analysts estimate next year's revenue growth at 1.7%, which is relatively modest. HP has raised its quarterly dividend to $0.30 per share, indicating a commitment to returning value to shareholders.
Memory Price Environment and Mitigation
HP has identified a headwind of $0.30 on EPS due to memory costs, but is taking actions to mitigate this impact, including pricing adjustments. The company prioritizes units with higher margins and expects AI PC dynamics to continue. With a solid position in the supply chain and long-term agreements with key suppliers, HP is well-equipped to manage the current memory cycle.