HP INC (HPQ) Stock Fundamental Analysis
NYSE:HPQ - New York Stock Exchange, Inc. - US40434L1052 - Common Stock - Currency: USD
We assign a fundamental rating of 5 out of 10 to HPQ. HPQ was compared to 32 industry peers in the Technology Hardware, Storage & Peripherals industry. While HPQ has a great profitability rating, there are quite some concerns on its financial health. HPQ is valued quite cheap, but it does not seem to be growing. Finally HPQ also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
HPQ had positive earnings in the past year.
HPQ had a positive operating cash flow in the past year.
In the past 5 years HPQ has always been profitable.
HPQ had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
The Return On Assets of HPQ (6.49%) is better than 81.25% of its industry peers.
HPQ has a Return On Invested Capital of 26.59%. This is amongst the best in the industry. HPQ outperforms 93.75% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for HPQ is significantly above the industry average of 16.14%.
The last Return On Invested Capital (26.59%) for HPQ is well below the 3 year average (31.68%), which needs to be investigated, but indicates that HPQ had better years and this may not be a problem.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.49% | ||
| ROE | N/A | ||
| ROIC | 26.59% |
ROA(3y)7.97%
ROA(5y)9.81%
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)31.68%
ROIC(5y)36.51%
1.3 Margins
With a decent Profit Margin value of 4.64%, HPQ is doing good in the industry, outperforming 75.00% of the companies in the same industry.
In the last couple of years the Profit Margin of HPQ has remained more or less at the same level.
HPQ's Operating Margin of 7.08% is fine compared to the rest of the industry. HPQ outperforms 62.50% of its industry peers.
In the last couple of years the Operating Margin of HPQ has grown nicely.
Looking at the Gross Margin, with a value of 21.15%, HPQ is doing worse than 68.75% of the companies in the same industry.
In the last couple of years the Gross Margin of HPQ has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 7.08% | ||
| PM (TTM) | 4.64% | ||
| GM | 21.15% |
OM growth 3Y-4.29%
OM growth 5Y1.94%
PM growth 3Y-20.49%
PM growth 5Y-0.69%
GM growth 3Y1.46%
GM growth 5Y3.02%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so HPQ is creating value.
HPQ has less shares outstanding than it did 1 year ago.
The number of shares outstanding for HPQ has been reduced compared to 5 years ago.
Compared to 1 year ago, HPQ has an improved debt to assets ratio.
2.2 Solvency
The Debt to FCF ratio of HPQ is 4.04, which is a neutral value as it means it would take HPQ, 4.04 years of fcf income to pay off all of its debts.
With a decent Debt to FCF ratio value of 4.04, HPQ is doing good in the industry, outperforming 75.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | N/A | ||
| Debt/FCF | 4.04 | ||
| Altman-Z | N/A |
ROIC/WACC3.53
WACC7.53%
2.3 Liquidity
HPQ has a Current Ratio of 0.73. This is a bad value and indicates that HPQ is not financially healthy enough and could expect problems in meeting its short term obligations.
With a Current ratio value of 0.73, HPQ is not doing good in the industry: 90.63% of the companies in the same industry are doing better.
A Quick Ratio of 0.42 indicates that HPQ may have some problems paying its short term obligations.
HPQ has a worse Quick ratio (0.42) than 90.63% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.73 | ||
| Quick Ratio | 0.42 |
3. Growth
3.1 Past
The earnings per share for HPQ have decreased by -5.31% in the last year.
HPQ shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 8.74% yearly.
Looking at the last year, HPQ shows a small growth in Revenue. The Revenue has grown by 2.45% in the last year.
The Revenue has been decreasing by -1.84% on average over the past years.
EPS 1Y (TTM)-5.31%
EPS 3Y-2.52%
EPS 5Y8.74%
EPS Q2Q%-13.41%
Revenue 1Y (TTM)2.45%
Revenue growth 3Y-5.5%
Revenue growth 5Y-1.84%
Sales Q2Q%3.28%
3.2 Future
HPQ is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 2.51% yearly.
Based on estimates for the next years, HPQ will show a small growth in Revenue. The Revenue will grow by 1.01% on average per year.
EPS Next Y-7.19%
EPS Next 2Y0.15%
EPS Next 3Y2.12%
EPS Next 5Y2.51%
Revenue Next Year2.17%
Revenue Next 2Y1.86%
Revenue Next 3Y1.91%
Revenue Next 5Y1.01%
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 7.73, the valuation of HPQ can be described as very cheap.
Compared to the rest of the industry, the Price/Earnings ratio of HPQ indicates a rather cheap valuation: HPQ is cheaper than 96.88% of the companies listed in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 27.25, HPQ is valued rather cheaply.
Based on the Price/Forward Earnings ratio of 7.29, the valuation of HPQ can be described as very cheap.
Based on the Price/Forward Earnings ratio, HPQ is valued cheaper than 84.38% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 36.80. HPQ is valued rather cheaply when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 7.73 | ||
| Fwd PE | 7.29 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of HPQ indicates a rather cheap valuation: HPQ is cheaper than 93.75% of the companies listed in the same industry.
93.75% of the companies in the same industry are more expensive than HPQ, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 8.76 | ||
| EV/EBITDA | 6.71 |
4.3 Compensation for Growth
The decent profitability rating of HPQ may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)0.88
EPS Next 2Y0.15%
EPS Next 3Y2.12%
5. Dividend
5.1 Amount
HPQ has a Yearly Dividend Yield of 4.51%, which is a nice return.
HPQ's Dividend Yield is rather good when compared to the industry average which is at 1.92. HPQ pays more dividend than 100.00% of the companies in the same industry.
HPQ's Dividend Yield is rather good when compared to the S&P500 average which is at 2.34.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.51% |
5.2 History
The dividend of HPQ is nicely growing with an annual growth rate of 11.65%!
HPQ has been paying a dividend for at least 10 years, so it has a reliable track record.
HPQ has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)11.65%
Div Incr Years14
Div Non Decr Years34
5.3 Sustainability
42.79% of the earnings are spent on dividend by HPQ. This is a bit on the high side, but may be sustainable.
HPQ's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP42.79%
EPS Next 2Y0.15%
EPS Next 3Y2.12%
24.8
-0.3 (-1.2%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryTechnology Hardware, Storage & Peripherals
Earnings (Last)
Earnings (Next)
Inst Owners82.45%
Inst Owner Change-0.12%
Ins Owners0.2%
Ins Owner Change-0.75%
Market Cap23.29B
Analysts66.67
Price Target27.57 (11.17%)
Short Float %2.83%
Short Ratio2.93
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.51% |
Yearly Dividend1.12
Dividend Growth(5Y)11.65%
DP42.79%
Div Incr Years14
Div Non Decr Years34
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-7.03%
Min EPS beat(2)-12.57%
Max EPS beat(2)-1.5%
EPS beat(4)0
Avg EPS beat(4)-4.86%
Min EPS beat(4)-12.57%
Max EPS beat(4)-0.96%
EPS beat(8)1
Avg EPS beat(8)-2.77%
EPS beat(12)3
Avg EPS beat(12)-1.65%
EPS beat(16)7
Avg EPS beat(16)-0.2%
Revenue beat(2)1
Avg Revenue beat(2)-0.18%
Min Revenue beat(2)-0.41%
Max Revenue beat(2)0.04%
Revenue beat(4)2
Avg Revenue beat(4)-0.2%
Min Revenue beat(4)-0.5%
Max Revenue beat(4)0.07%
Revenue beat(8)3
Avg Revenue beat(8)-0.92%
Revenue beat(12)3
Avg Revenue beat(12)-1.79%
Revenue beat(16)6
Avg Revenue beat(16)-1.03%
PT rev (1m)0%
PT rev (3m)-19.48%
EPS NQ rev (1m)0.11%
EPS NQ rev (3m)-15.9%
EPS NY rev (1m)0%
EPS NY rev (3m)-10.34%
Revenue NQ rev (1m)0.23%
Revenue NQ rev (3m)-1.2%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-0.24%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 7.73 | ||
| Fwd PE | 7.29 | ||
| P/S | 0.43 | ||
| P/FCF | 8.76 | ||
| P/OCF | 6.73 | ||
| P/B | N/A | ||
| P/tB | N/A | ||
| EV/EBITDA | 6.71 |
EPS(TTM)3.21
EY12.94%
EPS(NY)3.4
Fwd EY13.71%
FCF(TTM)2.83
FCFY11.42%
OCF(TTM)3.68
OCFY14.85%
SpS57.81
BVpS-1.36
TBVpS-10.63
PEG (NY)N/A
PEG (5Y)0.88
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.49% | ||
| ROE | N/A | ||
| ROCE | 31.41% | ||
| ROIC | 26.59% | ||
| ROICexc | 34.21% | ||
| ROICexgc | 406.86% | ||
| OM | 7.08% | ||
| PM (TTM) | 4.64% | ||
| GM | 21.15% | ||
| FCFM | 4.9% |
ROA(3y)7.97%
ROA(5y)9.81%
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)31.68%
ROIC(5y)36.51%
ROICexc(3y)43.22%
ROICexc(5y)62.78%
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)37.59%
ROCE(5y)43.81%
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3Y-19.53%
ROICexc growth 5Y-14.33%
OM growth 3Y-4.29%
OM growth 5Y1.94%
PM growth 3Y-20.49%
PM growth 5Y-0.69%
GM growth 3Y1.46%
GM growth 5Y3.02%
F-Score5
Asset Turnover1.4
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | N/A | ||
| Debt/FCF | 4.04 | ||
| Debt/EBITDA | 1.99 | ||
| Cap/Depr | 97.8% | ||
| Cap/Sales | 1.47% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 74.16% | ||
| Profit Quality | 105.64% | ||
| Current Ratio | 0.73 | ||
| Quick Ratio | 0.42 | ||
| Altman-Z | N/A |
F-Score5
WACC7.53%
ROIC/WACC3.53
Cap/Depr(3y)81.46%
Cap/Depr(5y)78.41%
Cap/Sales(3y)1.17%
Cap/Sales(5y)1.09%
Profit Quality(3y)107.26%
Profit Quality(5y)108.45%
High Growth Momentum
Growth
EPS 1Y (TTM)-5.31%
EPS 3Y-2.52%
EPS 5Y8.74%
EPS Q2Q%-13.41%
EPS Next Y-7.19%
EPS Next 2Y0.15%
EPS Next 3Y2.12%
EPS Next 5Y2.51%
Revenue 1Y (TTM)2.45%
Revenue growth 3Y-5.5%
Revenue growth 5Y-1.84%
Sales Q2Q%3.28%
Revenue Next Year2.17%
Revenue Next 2Y1.86%
Revenue Next 3Y1.91%
Revenue Next 5Y1.01%
EBIT growth 1Y-10.66%
EBIT growth 3Y-9.55%
EBIT growth 5Y0.07%
EBIT Next Year13.8%
EBIT Next 3Y4.08%
EBIT Next 5Y0.31%
FCF growth 1Y17.81%
FCF growth 3Y-18.48%
FCF growth 5Y-4.54%
OCF growth 1Y18.54%
OCF growth 3Y-16.37%
OCF growth 5Y-4.23%