HP INC (HPQ) Stock Fundamental Analysis
NYSE:HPQ - New York Stock Exchange, Inc. - US40434L1052 - Common Stock - Currency: USD
HPQ gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 32 industry peers in the Technology Hardware, Storage & Peripherals industry. While HPQ belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. HPQ is valued quite cheap, but it does not seem to be growing. HPQ also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
HPQ had positive earnings in the past year.
In the past year HPQ had a positive cash flow from operations.
HPQ had positive earnings in each of the past 5 years.
In the past 5 years HPQ always reported a positive cash flow from operatings.
1.2 Ratios
With an excellent Return On Assets value of 6.98%, HPQ belongs to the best of the industry, outperforming 84.38% of the companies in the same industry.
With an excellent Return On Invested Capital value of 30.02%, HPQ belongs to the best of the industry, outperforming 96.88% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for HPQ is significantly above the industry average of 15.58%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.98% | ||
| ROE | N/A | ||
| ROIC | 30.02% |
ROA(3y)7.97%
ROA(5y)9.79%
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)31.68%
ROIC(5y)36.41%
1.3 Margins
HPQ has a better Profit Margin (5.04%) than 68.75% of its industry peers.
In the last couple of years the Profit Margin of HPQ has remained more or less at the same level.
Looking at the Operating Margin, with a value of 7.61%, HPQ is in the better half of the industry, outperforming 62.50% of the companies in the same industry.
HPQ's Operating Margin has improved in the last couple of years.
HPQ has a Gross Margin of 21.85%. This is in the lower half of the industry: HPQ underperforms 65.63% of its industry peers.
In the last couple of years the Gross Margin of HPQ has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 7.61% | ||
| PM (TTM) | 5.04% | ||
| GM | 21.85% |
OM growth 3Y-3.92%
OM growth 5Y1.94%
PM growth 3Y-20.32%
PM growth 5Y-0.69%
GM growth 3Y1.45%
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.
Compared to 1 year ago, HPQ has less shares outstanding
HPQ has less shares outstanding than it did 5 years ago.
HPQ has a better debt/assets ratio than last year.
2.2 Solvency
HPQ has an Altman-Z score of 1.74. This is a bad value and indicates that HPQ is not financially healthy and even has some risk of bankruptcy.
With a Altman-Z score value of 1.74, HPQ perfoms like the industry average, outperforming 50.00% of the companies in the same industry.
The Debt to FCF ratio of HPQ is 2.97, which is a good value as it means it would take HPQ, 2.97 years of fcf income to pay off all of its debts.
HPQ's Debt to FCF ratio of 2.97 is amongst the best of the industry. HPQ outperforms 81.25% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | N/A | ||
| Debt/FCF | 2.97 | ||
| Altman-Z | 1.74 |
ROIC/WACC4.02
WACC7.46%
2.3 Liquidity
HPQ has a Current Ratio of 0.72. This is a bad value and indicates that HPQ is not financially healthy enough and could expect problems in meeting its short term obligations.
HPQ's Current ratio of 0.72 is on the low side compared to the rest of the industry. HPQ is outperformed by 87.50% of its industry peers.
A Quick Ratio of 0.42 indicates that HPQ may have some problems paying its short term obligations.
HPQ has a Quick ratio of 0.42. This is amonst the worse of the industry: HPQ underperforms 87.50% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.72 | ||
| Quick Ratio | 0.42 |
3. Growth
3.1 Past
HPQ shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -1.48%.
Measured over the past years, HPQ shows a quite strong growth in Earnings Per Share. The EPS has been growing by 8.74% on average per year.
HPQ shows a small growth in Revenue. In the last year, the Revenue has grown by 1.51%.
HPQ shows a decrease in Revenue. Measured over the last years, the Revenue has been decreasing by -1.84% yearly.
EPS 1Y (TTM)-1.48%
EPS 3Y-2.52%
EPS 5Y8.74%
EPS Q2Q%-8.64%
Revenue 1Y (TTM)1.51%
Revenue growth 3Y-5.51%
Revenue growth 5Y-1.84%
Sales Q2Q%2.42%
3.2 Future
Based on estimates for the next years, HPQ will show a small growth in Earnings Per Share. The EPS will grow by 5.32% on average per year.
The Revenue is expected to grow by 1.21% on average over the next years.
EPS Next Y6.45%
EPS Next 2Y5.52%
EPS Next 3Y5.8%
EPS Next 5Y5.32%
Revenue Next Year2.75%
Revenue Next 2Y2.47%
Revenue Next 3Y1.96%
Revenue Next 5Y1.21%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 7.18, the valuation of HPQ can be described as very cheap.
HPQ's Price/Earnings ratio is rather cheap when compared to the industry. HPQ is cheaper than 87.50% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 28.29. HPQ is valued rather cheaply when compared to this.
HPQ is valuated cheaply with a Price/Forward Earnings ratio of 6.31.
Based on the Price/Forward Earnings ratio, HPQ is valued cheaply inside the industry as 90.63% of the companies are valued more expensively.
HPQ's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 21.08.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 7.18 | ||
| Fwd PE | 6.31 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, HPQ is valued cheaper than 87.50% of the companies in the same industry.
HPQ's Price/Free Cash Flow ratio is rather cheap when compared to the industry. HPQ is cheaper than 96.88% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 6.88 | ||
| EV/EBITDA | 5.94 |
4.3 Compensation for Growth
The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
The decent profitability rating of HPQ may justify a higher PE ratio.
PEG (NY)1.11
PEG (5Y)0.82
EPS Next 2Y5.52%
EPS Next 3Y5.8%
5. Dividend
5.1 Amount
HPQ has a Yearly Dividend Yield of 4.86%, which is a nice return.
In the last 3 months the price of HPQ has falen by -26.70%. A price decline artificially increases the dividend yield. It may be a sign investors do not expect the dividend to last.
Compared to an average industry Dividend Yield of 3.78, HPQ pays a better dividend. On top of this HPQ pays more dividend than 96.88% of the companies listed in the same industry.
HPQ's Dividend Yield is rather good when compared to the S&P500 average which is at 2.52.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.86% |
5.2 History
On average, the dividend of HPQ grows each year by 11.65%, which is quite nice.
HPQ has been paying a dividend for at least 10 years, so it has a reliable track record.
HPQ has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)11.65%
Div Incr Years13
Div Non Decr Years33
5.3 Sustainability
39.48% of the earnings are spent on dividend by HPQ. This is a low number and sustainable payout ratio.
The dividend of HPQ is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP39.48%
EPS Next 2Y5.52%
EPS Next 3Y5.8%
23.83
+0.36 (+1.53%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryTechnology Hardware, Storage & Peripherals
Earnings (Last)
Earnings (Next)
Inst Owners82.73%
Inst Owner Change0%
Ins Owners0.1%
Ins Owner Change0.76%
Market Cap22.46B
Analysts67
Price Target37.14 (55.85%)
Short Float %2.96%
Short Ratio4.01
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.86% |
Yearly Dividend1.12
Dividend Growth(5Y)11.65%
DP39.48%
Div Incr Years13
Div Non Decr Years33
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-1.23%
Min EPS beat(2)-1.5%
Max EPS beat(2)-0.96%
EPS beat(4)1
Avg EPS beat(4)-1.72%
Min EPS beat(4)-4.43%
Max EPS beat(4)0.02%
EPS beat(8)2
Avg EPS beat(8)-0.68%
EPS beat(12)4
Avg EPS beat(12)-0.47%
EPS beat(16)8
Avg EPS beat(16)0.8%
Revenue beat(2)1
Avg Revenue beat(2)-0.23%
Min Revenue beat(2)-0.5%
Max Revenue beat(2)0.04%
Revenue beat(4)3
Avg Revenue beat(4)0.05%
Min Revenue beat(4)-0.5%
Max Revenue beat(4)0.59%
Revenue beat(8)3
Avg Revenue beat(8)-1.15%
Revenue beat(12)4
Avg Revenue beat(12)-1.67%
Revenue beat(16)7
Avg Revenue beat(16)-0.69%
PT rev (1m)-1.18%
PT rev (3m)-0.13%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-7.17%
EPS NY rev (1m)-0.23%
EPS NY rev (3m)-0.12%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.39%
Revenue NY rev (1m)-0.41%
Revenue NY rev (3m)0.16%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 7.18 | ||
| Fwd PE | 6.31 | ||
| P/S | 0.42 | ||
| P/FCF | 6.88 | ||
| P/OCF | 5.61 | ||
| P/B | N/A | ||
| P/tB | N/A | ||
| EV/EBITDA | 5.94 |
EPS(TTM)3.32
EY13.93%
EPS(NY)3.77
Fwd EY15.84%
FCF(TTM)3.46
FCFY14.54%
OCF(TTM)4.25
OCFY17.81%
SpS57.15
BVpS-1.14
TBVpS-11.59
PEG (NY)1.11
PEG (5Y)0.82
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.98% | ||
| ROE | N/A | ||
| ROCE | 35.65% | ||
| ROIC | 30.02% | ||
| ROICexc | 40.06% | ||
| ROICexgc | N/A | ||
| OM | 7.61% | ||
| PM (TTM) | 5.04% | ||
| GM | 21.85% | ||
| FCFM | 6.06% |
ROA(3y)7.97%
ROA(5y)9.79%
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)31.68%
ROIC(5y)36.41%
ROICexc(3y)43.22%
ROICexc(5y)62.59%
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)37.59%
ROCE(5y)43.67%
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3Y-19.23%
ROICexc growth 5Y-14.33%
OM growth 3Y-3.92%
OM growth 5Y1.94%
PM growth 3Y-20.32%
PM growth 5Y-0.69%
GM growth 3Y1.45%
GM growth 5Y3.02%
F-Score7
Asset Turnover1.38
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | N/A | ||
| Debt/FCF | 2.97 | ||
| Debt/EBITDA | 1.69 | ||
| Cap/Depr | 89.54% | ||
| Cap/Sales | 1.37% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 81.34% | ||
| Profit Quality | 120.16% | ||
| Current Ratio | 0.72 | ||
| Quick Ratio | 0.42 | ||
| Altman-Z | 1.74 |
F-Score7
WACC7.46%
ROIC/WACC4.02
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)108.55%
High Growth Momentum
Growth
EPS 1Y (TTM)-1.48%
EPS 3Y-2.52%
EPS 5Y8.74%
EPS Q2Q%-8.64%
EPS Next Y6.45%
EPS Next 2Y5.52%
EPS Next 3Y5.8%
EPS Next 5Y5.32%
Revenue 1Y (TTM)1.51%
Revenue growth 3Y-5.51%
Revenue growth 5Y-1.84%
Sales Q2Q%2.42%
Revenue Next Year2.75%
Revenue Next 2Y2.47%
Revenue Next 3Y1.96%
Revenue Next 5Y1.21%
EBIT growth 1Y-3.76%
EBIT growth 3Y-9.21%
EBIT growth 5Y0.07%
EBIT Next Year14.84%
EBIT Next 3Y3.39%
EBIT Next 5Y1.68%
FCF growth 1Y57.02%
FCF growth 3Y-18.48%
FCF growth 5Y-4.54%
OCF growth 1Y43.44%
OCF growth 3Y-16.37%
OCF growth 5Y-4.23%