HP Q4 Earnings: Is HPQ Cheap at 7.0x Price/EPS?

in EARNINGS/INVESTING IDEAS by

HP Inc. (NYSE:HPQ) is scheduled to report Q4 earnings results on November 26, 2019 at 1:30 PM PST. You can find more information about the conference call here.

The company is expected to report earnings of $0.58/share on revenue of $15.322 billion. The consensus earnings per share (EPS) of $0.58/share is based on a poll of 14 analysts and represents a growth of 7.4% over the same quarter last year when the company reported earnings of $0.54/share.

The revenue forecast of $15.322 billion based on a poll of 12 analysts implies a year-over-year (YoY) decline of -0.3%. Last year the company reported $15.366 billion in revenue for the quarter.

Expected to report EPS growth of $0.04/share for Q4, 2019
Metric Expected Prior Year YoY Change
Revenue $15,322.00 $15,366.00 -0.3%
EPS $0.58 $0.54 7.4%

Earnings Call Trends

Historically, management has exceeded analyst expectations 4 out of the last 8 tracked quarters and met expectations 4 quarters. What are your expectations from HP for earnings this quarter? Let us know in the comments!

Analyst Expected vs Reported EPS
Quarter Expected Reported Surprise Result
Q3, 2019 $0.55 $0.58 6.0% Beat
Q2, 2019 $0.51 $0.53 3.9% Beat
Q1, 2019 $0.52 $0.52 0.0% Meet
Q4, 2018 $0.54 $0.54 0.0% Meet
Q3, 2018 $0.51 $0.52 2.1% Beat
Q2, 2018 $0.48 $0.48 0.0% Meet
Q1, 2018 $0.42 $0.48 14.3% Beat
Q4, 2017 $0.44 $0.44 0.0% Meet

One question we always consider here at the Bankers’ Tribune is how important are earnings reports to HP’s stock price performance? It’s more important for some companies than for others.

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending July 31, 2019, the stock price reacted by falling by -6.1%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-08-22 $18.96 $17.81 -6.1% Decline
2019-05-23 $19.20 $20.03 4.3% Increase
2019-02-27 $23.90 $19.73 -17.4% Decline
2018-11-29 $23.43 $23 -1.8% Decline

Fundamentals And Technical Analysis

HP is currently trading at $20.14/share, up 1.0% for the day. The company is trading at approximately 78.3% of its 52-week high of $25.72/share. The company’s stock price is up 13.1% since the last earnings report and up 0.6% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 71.34 suggests the company is trading in technically overbought territory. The RSI is considered overbought when above 70 and oversold when below 30.

The current share price implies a price-to-earnings (P/E) multiple of 7.0x and a forward P/E multiple of 8.8x. HP’s current share price also implies a price-to-book (P/B) multiple of -26.1x. The following table summarizes some other key fundamental ratios:

Data as of November 25, 2019
Metric Value
Last Fiscal Period FY2019.Q3
Period End Date July 31, 2019
Stock Price (Current) $20.14
P/E Ratio 7.0x
P/E Ratio (Fwd) 8.8x
PEG Ratio -2.4
Total Debt to Capital (%) 14.6%
Levered Free Cash Flow $4.372 billion
Enterprise Value / EBITDA 5.9x

Source: Finbox

Company Profile: HP Inc.

HP Inc. is a large-cap stock with a market capitalization of $29.549 billion and a total enterprise value of $29.688 billion. The company operates in the Information Technology sector and Technology Hardware, Storage & Peripherals industry.

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 company operates through three segments: Personal Systems, Printing, and Corporate Investments.

The Personal Systems segment offers commercial and consumer desktop and notebook personal computers, workstations, thin clients, commercial mobility devices, retail point-of-sale systems, displays, and other related accessories, software, support, and services.

The Printing segment provides consumer and commercial printer hardware, supplies, solutions, and services, as well as scanning devices.

The Corporate Investments segment includes HP Labs and business incubation projects. It serves individual consumers, small- and medium-sized businesses, and large enterprises, including customers in the government, health, and education sectors.

HP Inc. has a strategic alliance with Siemens AG; and collaboration with SmileDirectClub. The company was formerly known as Hewlett-Packard Company and changed its name to HP Inc. in October 2015.

HP Inc. was founded in 1939 and is headquartered in Palo Alto, California.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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