Fair value: the average of the applicable valuation models (discounted cash flow, multiples, residual income, dividend discount, shareholder yield), each run on the latest financial statements and the market price shown. Opinion columns (fair value, target, rating) are shown apart from the data. Full methodology: acceinvestments.com/data/how-we-value-stocks
Conflicts of interest: The author holds no personal position in this security. General statement
Produced by ACCE Investments (acceinvestments.com)
Data
Price vs fair value
4.4% below
+4.6% to fair value
ACCE score
62
out of 100
Analysts
11% buy
18 covering
P/E
12.9x
forward 9.9x
1-year return
+20.9%
Dividend yield
3.80%
HP Inc. Common Stock in four questions
Plain answers, details below
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Overview
ACCE thesis
HP Inc. sells PCs (including its Pavilion, Envy, Spectre and business-focused EliteBook and ProBook lines), printers and supplies, and is the largest printer maker by installed base. Its moat rests mainly on the recurring ink and toner revenue from that installed base, which is why a hardware company can earn steady cash flow long after the sale. The near-term question is whether the PC refresh cycle keeps revenue growing, which the 12.5% growth figure suggests it is doing. At 11.4x trailing and 9.5x forward earnings, the stock trades at a discount to the broader market, but the 5.4% operating margin and 19.7% gross margin leave little room for error if pricing or component costs turn. Worth a deeper look to test whether that growth is durable and whether the margin profile can hold, with the ROE figure of 0.0% likely needing a check against the underlying balance sheet before drawing conclusions.