European Investor
27 Aug 2026, 09:57
HP Drops 9% Premarket as Margin Pressure and Weak Unit Trends Overshadow Strong Revenue
HP Inc. (NYSE: HPQ) shares are down about 9% in premarket trading despite reporting record fiscal third-quarter revenue and raising its full-year EPS and free cash flow outlook. The selloff appears centered on underlying profitability and hardware demand rather than headline revenue growth.
Revenue increased 12.5% year over year to $15.7 billion, while non-GAAP EPS rose 11% to $0.83. However, the quarter received a significant boost from tariff refunds, which added $0.11 per share. Excluding that benefit, underlying EPS would have been approximately $0.72.
Margin and unit weakness weigh on shares
The biggest concern was margin pressure. Non-GAAP operating margin fell to 6.5% from 7.1% a year earlier despite double-digit revenue growth, highlighting the challenging cost environment.
Personal Systems revenue jumped 18% to $11.8 billion, helped by commercial PCs and premium products, but total PC units actually fell 16%. That divergence suggests higher pricing and product mix were doing much of the work rather than expanding shipment volumes.
Printing remained another weak spot, with revenue falling 2%, supplies revenue down 3% and hardware units declining 7%.
HP raised FY2026 non-GAAP EPS guidance to $3.19-$3.29 and free cash flow guidance to $3.0-$3.2 billion. However, the outlook includes an estimated $0.19 EPS benefit from tariff refunds.
The 9% premarket decline therefore appears to reflect investor concern that strong headline revenue and raised guidance mask softer underlying trends, particularly contracting non-GAAP margins, declining PC unit volumes, continued weakness in printing and meaningful earnings support from temporary tariff refunds.
HP Inc. (NYSE: HPQ) shares are down about 9% in premarket trading despite reporting record fiscal third-quarter revenue and raising its full-year EPS and free cash flow outlook. The selloff appears centered on underlying profitability and hardware demand rather than headline revenue growth.
Revenue increased 12.5% year over year to $15.7 billion, while non-GAAP EPS rose 11% to $0.83. However, the quarter received a significant boost from tariff refunds, which added $0.11 per share. Excluding that benefit, underlying EPS would have been approximately $0.72.
Margin and unit weakness weigh on shares
The biggest concern was margin pressure. Non-GAAP operating margin fell to 6.5% from 7.1% a year earlier despite double-digit revenue growth, highlighting the challenging cost environment.
Personal Systems revenue jumped 18% to $11.8 billion, helped by commercial PCs and premium products, but total PC units actually fell 16%. That divergence suggests higher pricing and product mix were doing much of the work rather than expanding shipment volumes.
Printing remained another weak spot, with revenue falling 2%, supplies revenue down 3% and hardware units declining 7%.
HP raised FY2026 non-GAAP EPS guidance to $3.19-$3.29 and free cash flow guidance to $3.0-$3.2 billion. However, the outlook includes an estimated $0.19 EPS benefit from tariff refunds.
The 9% premarket decline therefore appears to reflect investor concern that strong headline revenue and raised guidance mask softer underlying trends, particularly contracting non-GAAP margins, declining PC unit volumes, continued weakness in printing and meaningful earnings support from temporary tariff refunds.
