Yearly Value Revue for HP (HPQ)

HP shares moved -19.5% over the last 52 weeks, with a high of $41.47 and a low of $24.08. During this time, the stock lagged the S&P 500 index by -9.6%. As of January 2022, the company's 50-day average price is $28.28. HP Inc. provides personal computing and other access devices, imaging and printing products, and related technologies, solutions, and services in the United States and internationally. The large-cap Technology company has 58,000 full time employees and is based in Palo Alto, CA. HP has returned a 3.4% dividend yield over the last 12 months.

Revenues and Margins With a Positive Growth Rate:

2019-10-31 2020-10-31 2021-10-31 2022-10-31
Revenue (MM) $58,756 $56,639 $63,487 $62,983
Revenue Growth n/a -3.6% 12.09% -0.79%
Gross Margins 19.0% 18.4% 21.1% 19.6%
Gross Margins Growth n/a -3.16% 14.67% -7.11%
Operating Margins 5.1% 6.6% 8.9% 8.3%
Operating Margins Growth n/a 29.41% 34.85% -6.74%
Earnings Per Share $2.07 $2.0 $5.33 $3.05
EPS Growth n/a -3.38% 166.5% -42.78%
Free Cash Flow (MM) $3,983 $3,736 $5,827 $3,672
FCF Growth n/a -6.2% 55.97% -36.98%
Capital Expenditures (MM) -$671 -$580 -$582 -$791
Net Debt / EBITDA 0.16 0.34 0.54 1.34

HP Is Currently Fairly Valued:

Compared to the Technology sector's average of 26.5, HP has a trailing twelve month P/E ratio of 9.6 and, according to its EPS guidance of 3.67, an expected P/E ratio of 8.0. HP's PEG ratio is 0.27 based on its 35.0% annual average growth rate of historical and projected earnings per share. However, we believe that it is more prudent to calculate the PEG ratio using the broader market's 5-year expected EPS growth rate of 13.05%, because the growth rate implied by HP's past and expected EPS is probably not sustainable. This more prudent approach shows a PEG ratio of 0.73, which still suggests that company's shares are possibly undervalued.

HP's elevated P/B ratio notwithstanding, the company's strong cash flows and healthy debt levels factor towards it being fairly valued.

HP Is the Subject of Mixed Market Indicators:

16 analysts are following HP and have set target prices ranging from $24 to $37 per share. On average, they have given the company a rating of hold. At the current price of $29.23, HPQ is trading -0.37% away from its average analyst target price of $29.34 per share, implying an analyst consensus of some upside potential for the stock.

The company has an average amount of shares sold short since 3.4% of the company's shares are tied to short positions. Institutions own 83.4% of HP's shares, while the insider ownership rate stands at 0.21%. The biggest shareholder is Berkshire Hathaway, Inc with a 11% stake in the company worth approximately $3,053,834,455.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.