HPQ Investment Analysis Report & Stock Research, Hewlett-Packard Company

Hewlett-Packard Company (HPQ)

HPQ Stock Report

2-Year Price History

View Larger HPQ Chart
NYSE:HPQ
$48.25
(2/9 3:02PM)
+1.4%
Open$48.1 Mkt Cap$112.0 Billion
High$48.84 52Wk High$52.95
Low$47.86 52Wk Low$25.39
Volume13.2 Million Avg Vol 10D18.6 Million

Ockham's Rating/Recommendation Summary

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HPQ Revenue

As a value investing shop, we are interested in seeing how HPQ's revenues measure up against past performances. One easily understandable way of doing that is to compare Price to Sales per share levels over a given time frame. Assuming it is available, Ockham prefers to look at ten years of history (for this stock there are 10 years of history available) and we weigh recent years more heavily. This allows us to find weighted average historical high and low Price to Sales ratios, which give us a better idea of the stock's current underlying value. Using this method, we have established a high range for Price to Sales of 1.19x and the low end of the range at 0.71x.

With respect to these historically rational metrics, notice that the current Price to Sales per share ratio for HPQ of 0.98x is above its historical average only slightly. So, while not a major concern it is worth noting that from a value perspective HPQ does not look undervalued on a Price to Sales basis. However, were the Price to Sales ratio to drop by 2% (the historical average) then we would become more positive on this stock.

HPQ Cash Earnings

As the old saying goes, "Cash is King!" We look at reported Cash Earnings, but the main emphasis of our analysis involves stripping out non-cash events such as depreciation from our cash earnings analysis. This helps us view the cash flows more clearly. Nevertheless, an analysis of Cash Earnings (both reported and otherwise) is absolutely pivotal to assessing a company's value, and currently HPQ is significantly below its historical average multiple of Cash Earnings. Looking at the last 10 years we can get a good understanding of what investors have grown to expect from HPQ. For example, HPQ's Cash Earnings ratio per share has fluctuated between 9.30 and 16.43 over this historical timeframe. This range is based upon a proprietary weighted methodology at Ockham, but can clearly show an investor where HPQ is with respect to prior business periods.

So with HPQ's current price (latest close of $47.32) and most recent level of Cash Earnings reported, we see significant opportunity from a value perspective. At its current price level, HPQ is 32% below its average level of Price to Cash Earnings on a historical basis. This means that investors were willing to pay for a much higher stock price than currently for the same level of Cash in the past, on a relative basis. There are a couple of important things to remember, however. First, value doesn't exist in a vacuum. So if the market doesn't recognize this value, even a great disparity in Price to Cash Earnings cannot force an immediate stock price reaction. Second, patience is key when looking at securities that have reached these levels of Price to Cash Earnings versus their historical norms. So be patient with HPQ.

HPQ Dividends

A strong dividend payment history is looked upon as a favorable characteristic on a company’s future and potentially can receive a positive Ockham rating. That being said, we don't require dividend payments for company's whose management has elected to forgo them entirely.

When reviewing dividend yields for HPQ, we compare the historic high and low levels over the past, which is similar to our evaluation of Sales and Cash Earnings per share. Paying a dividend is not necessary for any company, but changes in dividend often can lend clues as to the health of the business. A rising dividend is a strong sign for an established company, as it reflects management's confidence in the company. HPQ’s estimated annual dividend is $0.32 resulting in a current dividend yield of 0.68%. The highest dividend yield from HPQ over recent history was 2.98% while the lowest dividend yield was 0.60%. With that range in mind, HPQ’s current dividend yield is a full 62.01% below its median dividend yield historically. This is a negative from our perspective.

Peer Comparison

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Hewlett-Packard Company Industry Grouping

(2/8/2010)
Company Ticker Market Cap (Ml) Latest
Price
Price/Cash Earnings Price/Sales 5-Yr. Rev.
Growth Rate
5-Yr.
Avg. ROE.
Current 10-Yr. Range* Current 10-Yr. Range*
Peer Company Averages (not including HPQ) 15.37 7.56 » 335.25 2.54 1.04 » 10.14 15.01% 32.50%
*10 year range does not include current year values
Apple, Inc. AAPL $176.0 Billion $194.12 21.53 10.43 » 186.01 4.21 0.75 » 5.63 34.57% 21.08%
International Business Machines Corp. IBM $160.1 Billion $121.88 8.97 5.25 » 27.38 1.69 0.90 » 2.68 3.06% 42.78%
Cisco Systems, Inc. CSCO $135.2 Billion $23.50 18.09 9.96 » 261.76 3.84 2.19 » 14.64 10.38% 22.14%
Hewlett-Packard Company HPQ $112.0 Billion $47.59 8.76 4.71 » 62.91 0.98 0.53 » 2.06 7.47% 16.38%
EMC Corp. EMC $34.4 Billion $16.84 16.65 6.94 » 1146.14 2.44 1.12 » 25.15 18.99% 10.50%
Dell, Inc. DELL $26.2 Billion $13.39 11.61 5.24 » 54.96 0.50 0.24 » 2.61 8.07% 66.00%
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Countdown to the Closing Bell

Check Out Countdown to the Closing Bell and News on HPQ

Hewlett-Packard Company is one of the thousands of companies that Ockham has news analytics on, and it was recently discussed on Countdown to the Closing Bell.

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Learn About RazorWire?
Fox Business

See Why Hewlett-Packard Company News Was Discussed on Fox Business

As always, the latest news on HPQ is available to Ockham clients through RazorWire, and it was mentioned recently on Fox Business.

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Learn About RazorWire?
Power Lunch

HPQ News Mentioned on Power Lunch Recently

The latest news on Power Lunch in regards to HPQ came through on RazorWire recently.

Premium Content - please sign up for Ockham PREMIUM to gain full access and to see what Power Lunch said about HEWLETT-PACKARD COMPANY

Learn About RazorWire?
Fox Business

HPQ News Mentioned on Fox Business Recently

Hewlett-Packard Company is one of the thousands of companies that Ockham has news analytics on, and it was recently discussed on Fox Business.

Hewlett-Packard Company receives our Fairly Valued rating in our latest report because the current price does not seem out of line with the fundamentals. We noticed recently that in comparison to all other stocks we analyze in the news; HPQ has received less coverage from the financial media in business television and blogs. The Motley Fool CAPS crowd believes this stock will perform generally in line with the benchmark, or in other words the crowd is neutral.

“… HEWLETT-PACKARD is on there, and walt disney getting an upgrade citing the macroeconomic outlook sang walt disney will benefit from a rebound in the broader economy. …”

Fox Business

Dividends and Hewlett-Packard Company Among the Topics Covered on Fox Business

If HPQ's dividends are important to you, take a look at the news as they were the topic of conversation on Fox Business.

Hewlett-Packard Company receives our Fairly Valued rating in our latest report because the current price does not seem out of line with the fundamentals. We noticed recently that in comparison to all other stocks we analyze in the news; HPQ has received less coverage from the financial media in business television and blogs. Crowd sentiment is leaning to the bearish side, according to the robust data set collected by the Motley Fool CAPS survey.

“… HEWLETT-PACKARD, intel a couple technology companies in there as well. I also want to show you utx, united technologies because its board of directors just approved a 10. …”

Power Lunch

News Developing on Power Lunch for HPQ

The latest news from Power Lunch on HPQ is available through Ockham's news analytics platform RazorWire.

The Motley Fool CAPS data suggests that investors believe Hewlett-Packard Company will beat the market in the foreseeable future. As we analyze the results from RazorWire, one thing we do is rank each stock in terms of amount of news coverage. Recently, HPQ has been less covered in the news compared to the rest of our universe of stocks. After factoring in the current fundamentals versus their historically normal ranges, we have established a Fairly Valued stance on HPQ.

“… Shouldn't HEWLETT-PACKARD have bought these guys a long time ago? > > well, it's an attractive company right now, we think. …”

Mad Money

Heard on Mad Money: CEO of HPQ Discussed

Staying in touch with the latest management news is one way we are keeping our clients informed. Notice, RazorWire has a news capture related to HPQ's CEO.

We noticed recently that in comparison to all other stocks we analyze in the news; HPQ has received less coverage from the financial media in business television and blogs. Hewlett-Packard Company receives our Fairly Valued rating in our latest report because the current price does not seem out of line with the fundamentals. The Motley Fool CAPS crowd believes this stock will perform generally in line with the benchmark, or in other words the crowd is neutral.

“… HEWLETT-PACKARD was down yesterday because of competitor concerns about lexmark, a second rate, if you don't mind my saying, printer company. …”

Fast Money

Notice a Discussion Covering HPQ Appeared Recently in the Financial News

The latest news on Fast Money in regards to HPQ came through on RazorWire recently.

As we analyze the results from RazorWire, one thing we do is rank each stock in terms of amount of news coverage. Recently, HPQ has been less covered in the news compared to the rest of our universe of stocks. Crowd sentiment is neutral from the millions of opinions submitted through Motley Fool CAPS, which suggests most investors on their platform believe Hewlett-Packard Company will perform just about the same as the index. After factoring in the current fundamentals versus their historically normal ranges, we have established a Fairly Valued stance on HPQ.

“… Therefore, you might be a believer also, pete, in the juniper story, in the broken story, in the HEWLETT-PACKARD/comstory out there. I think juniper is a name. …”

Closing Bell

Closing Bell: Discussion of HPQ's Earnings

Earnings are one of the most important fundamental factors we track, so we are always interested in the latest profit reports and news.

As we analyze the results from RazorWire, one thing we do is rank each stock in terms of amount of news coverage. Recently, HPQ has been less covered in the news compared to the rest of our universe of stocks. After factoring in the current fundamentals versus their historically normal ranges, we have established a Fairly Valued stance on HPQ. Crowd sentiment is neutral from the millions of opinions submitted through Motley Fool CAPS, which suggests most investors on their platform believe Hewlett-Packard Company will perform just about the same as the index.

“… We own ibm and we own intel and we own HEWLETT-PACKARD. > > you're overweight tech as well as you like health care also. And you say that in financials, the worst is over. …”

Closing Bell

RazorWire has Detected News About HPQ on Closing Bell

The latest news on Closing Bell in regards to HPQ came through on RazorWire recently.

Investors are headed for the exit following today's news as the stock is trading down $2.68. When taking into account the amount of news coverage each stock normally sees as a percentage of the total, Hewlett-Packard Company has actually sunk a bit in comparison to the others. The Ockham valuation currently has a Fairly Valued stance on HPQ because it trades within the price range that we would expect given current market conditions and fundamentals. Our sentiment indicator, provided through the Motley Fool CAPS survey, suggests that investors are neutral overall towards HPQ and think that it will generally perform in-line with the S&P 500.

“… HEWLETT-PACKARD lower today. And take a look the widely helds in technology, all of them lower, across the board. Microsoft, intel, ibm, apple and google. …”

View All Hewlett-Packard Company Stock News

Key Fundamentals

HPQ - Hewlett-Packard Company Fundamentals
Price (2/9 3:02PM) $48.25
Volume (2/9 3:02PM) 13.2 Million
Last Close Price $47.59
10 Day Average Volume 18.6 Million
13 Week Price Range $46.46 - $52.95
52 Week Price Range $25.39 - $52.95
LTM Revenue $114.6 Billion
 
Shares Outstanding (10/2009) 2.4 Billion
Market Capitalization $112.0 Billion
Shares Held By Institutions 1.9 Billion
Institutional Holders 1,635
% Shares Held By Institutions 78.40%
Earnings Per Share (EPS) $3.14
P/E Ratio 15.20
Book Value Per Share $17.14
 
Gross Margin 27.00%
Annual Dividend 0.32
Dividend Yield 0.70%
Beta 1.04
Fiscal Year Ends October

About Hewlett-Packard Company

Hewlett-Packard Company is considered to operate in the Technology sector. They specifically operate in the Diversified Computer System business segment contained within the Computer Hardware industry.

The Company is a global provider of products, technologies, software, solutions and services to individual consumers, small- and medium-sized businesses and large enterprises, including customers in the government, health and education sectors.