HP Inc.HPQ is set to report fourth-quarter fiscal 2016 results on Nov 22. Last quarter, the company posted a positive earnings surprise of 6.67%. Let us see how things are shaping up for this announcement.

Factors to Consider

HP reported better-than-expected third-quarter fiscal 2016 results driven mainly by strength in Personal System, outperformance of newly launched products and execution of restructuring actions and productivity initiatives.

Despite bleak year-over-year top-line comparisons, we are impressed by the performance of HP Inc.'s PC segment, wherein a slight year-over-year increase was witnessed after several quarters of decline.

Most recently, the company announced the release of its non-GAAP earnings outlook for fiscal 2017. In addition, the company also announced a second round of job cuts this year to reduce costs amid declining demand for PC and printers. This did not go down well with investors.

HP revealed that it expects to generate earnings per share in the range of $1.55 to $1.65 (midpoint: $1.60). At its midpoint, the guidance falls short of the Zacks Consensus Estimate of $1.61.

On a GAAP basis, HP projects earnings to range between $1.47 and $1.57 per share (mid-point $1.52).

In addition to revising its fiscal 2017 outlook, HP revealed that it is planning to trim its employee count by 3,000 to 4,000 across different levels over the next three years, that is, from fiscal 2017 through fiscal 2019. This announcement is likely a part of its ongoing restructuring plan.

It should be noted that the new job cuts are in addition to the company's planned job cut of 3,000 employees by the end of fiscal 2016, which was announced this February. Currently, HP has approximately 50,000 employees.

The company expects the recently announced job cut to generate annualized cost savings of approximately $200 million to $300 million from fiscal 2020 onward. The company anticipates one-time charges in the range of $350 million to $500 million associated with the job cut. We believe that the company's ongoing restructuring initiatives will help trim costs, while enhancing both productivity and profitability.

Notably, HP also signed a deal to acquire Samsung Electronics' printer business for a purchase price of $1.05 billion. This strategic move will expand the company's printing business as Samsung has more than 6,500 printing patents. All these will support development and manufacture of HP printers.

Nonetheless, the persistent decline in PC shipments remains a material headwind for the company. Given the fact that the PC business generates majority of the company's top line, the reduction in business volumes at the segment is concerning.

Therefore, the company is focusing on product innovations to drive top-line growth and lower costs through a restructuring plan.

Macroeconomic challenges and tepid IT spending also remain near-term concerns. Competition from the likes of International Business Machines IBM and Apple add to its woes.

HP INC Price and EPS Surprise

HP INC Price and EPS Surprise | HP INC Quote

Earnings Whispers

Our proven model does not conclusively show that HP Inc.is likely to beat the Zacks Consensus Estimate in its upcoming release. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.

Zacks ESP: The Earnings ESP for HP is -2.78%. This is because the Most Accurate estimate stands at 35 cents while the Zacks Consensus Estimate is pegged higher at 36 cents.You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: HP has a Zacks Rank #3. Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company's ESP of -2.78% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a couple of stocks, which you may consider as our model shows that they have the right combination of elements to post an earnings beat in their upcoming releases:

Marvell Technology Group Ltd. MRVL , with an Earnings ESP of +40.00% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here

Broadcom Ltd. AVGO , with an Earnings ESP of +1.74% and a Zacks Rank #3

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.