Today, HP Inc (HPQ, Financial) experienced a daily gain of 3.63%, contributing to a 3-month gain of 4.95%. With an Earnings Per Share (EPS) of 3.42, investors might wonder if the stock is fairly valued. This article aims to explore HP's current market valuation using the GF Value, providing a detailed analysis to determine whether HP stands as a prudent investment opportunity at its current price of $29.44.
Company Overview
HP, formerly known as Hewlett-Packard, has been a dominant player in the PC and printing markets since its strategic split from Hewlett Packard Enterprise in 2015. Focusing primarily on the commercial market while maintaining a significant presence in consumer devices and printers, HP boasts a broad and global customer base. Notably, only a third of its sales originate from the U.S., and the company relies heavily on channel partners for sales and marketing, having outsourced all manufacturing operations. With a current market cap of $28.80 billion and a sales revenue of $53.10 billion, understanding HP's intrinsic value becomes crucial for investors.
Understanding GF Value
The GF Value is a proprietary measure indicating the intrinsic value of a stock, based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. For HP, the GF Value is set at $30.14, suggesting that the stock is fairly valued at its current price. This valuation implies that the long-term return of HP's stock should align closely with the rate of its business growth, barring significant market fluctuations.
Financial Strength and Stability
Investing in companies with solid financial strength is crucial to minimize the risk of capital loss. HP's cash-to-debt ratio stands at 0.21, which is lower than 88.43% of its peers in the Hardware industry. This positions HP's financial strength at a moderate level, with a GuruFocus rating of 5 out of 10.
Profitability and Growth Metrics
HP has maintained profitability over the past decade, showcasing a robust operating margin of 8.09%, which ranks well within its industry. The company's focus on profitable growth is further evidenced by its impressive ROIC of 16.17, surpassing its WACC of 9.37. This indicates that HP is effectively creating value for its shareholders.
Conclusion: Is HP (HPQ, Financial) a Worthy Investment?
Considering HP's fair valuation, sound financial structure, and strong profitability, the stock presents itself as a potentially stable investment. Investors looking for long-term growth at a reasonable price might find HP an attractive option. For those interested in further details about HP's financials, feel free to explore the 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
