HP CEO Enrique Lores on CNBC on Tuesday forecast a bright future for his company after it decided to increase the amount of earnings it shares with stockholders.
The PC maker boosted its quarterly cash dividend by double digits to just over 19 cents per share, which it announced as part of its better-than-expected results in the final quarter of HP’s 2020 fiscal year.
“You should take this as a sign of the confidence we have in the future of the company, increasing [the] dividend by 10% in fiscal year ’21, driven by strong momentum we see in our businesses in print and personal systems,” Lores said in a “Mad Money” interview with Jim Cramer.
HP shares were up more than 5% in after-hours trading after the company posted adjusted earnings of 62 cents per share on revenue of $15.3 billion, beating Wall Street analysts’ expectations of 52 cents and $14.7 billion, respectively. The quarter was powered by consumer spending on PCs and printers as Americans equipped their home offices amid the pandemic, and HP’s commercial business continued to languish.
The company said it paid a cash dividend of $238 million in the fourth quarter.
Consumer revenues grew by 24% during the three-month period ending Oct. 31, while commercial revenues declined by 12%. While notebook sales surged 18% to $7.41 billion, driven by the work- and learn-from-home economy, HP’s total revenues were down 1% year over year.
After four straight quarters of revenue declines, HP reported $56.4 billion in revenue for the 2020 fiscal year, down 3.6% from about $58.76 billion the year prior.
As for the first fiscal quarter of 2021, HP is projecting adjusted earnings of 64 cents to 70 cents per share, above the Refinitiv consensus of 54 cents.
Lores is banking on a return in its commercial business as the country emerges from the limitations of the pandemic in 2021.
“What this crisis has shown is that we are a very resilient company,” he said. “We have a very strong consumer business that is helping us now. … When people will go back to the office, our commercial business will grow again.”
HP shares rose 2.6% Tuesday, closing at $21.75 per share before the company posted earnings. While the stock is up 5.84% year to date, the share price remains about $2 away from its February high before the marketwide meltdown that was sparked by coronavirus fears.
