The Palo Alto, Calif., company's stock recently traded at $30.09, up 5.3%. It has declined 14% in the past six months.
For fiscal 2022, ending about Oct. 31, 2022, HP expects earnings per share of $3.86 to $4.06, or $4.07 to $4.27 on an adjusted basis.
The FactSet analyst consensus called for $3.58 a share, or $3.79 on an adjusted basis.
HP projects $4.5 billion of free cash flow for the year, and that’s why it’s lifting its annual dividend 29% to $1 a share from 77.5 cents. It plans to spend the rest of the free cash flow on share buybacks.
The news led Morningstar analyst Mark Cash to raise his fair value estimate for HP’s stock to $27 from $25. But he's still conservative on the stock.
“We favorably viewed HP’s commitment to returning at least 100% of free cash flow to investors through dividends and share repurchases,” he wrote in a commentary Wednesday.
“However, we remain skeptical about the longer-term enthusiasm HP has regarding the computer and printing markets being sustainable growth areas that can provide increased operating margin dollars.
“While we positively view particular innovative, higher margin and growth areas like personal systems peripherals, graphics, and printing packaging, our anticipation is the surge in demand for core PC and printing solutions will begin to lull as HP works through the backlog brought on by the pandemic and supply chain constraints.
“In turn, we see shares as modestly overvalued.”