HP Inc (HPQ)

Conclusion

HP Inc is a US technology company that sells personal computers, workstations and printers, along with 3D printing, hybrid work and related services, through its Personal Systems, Printing and Corporate Investments segments. On 2026-11-09 the share price was 28.25 USD, giving a market capitalisation of 25.5 billion USD.

The verdict is undervalued. The current P/E of 10.4x is close to its ten-year median of 10.1x, and EV/EBITDA of 8.4x is close to its median of 8.4x. Price to free cash flow, at 6.6x, is below its median of 9.0x. The DCF gives 39.97 USD per share and the fair value from historical multiples is 32.89 USD. The fair value band runs from 29.14 to 43.71 USD, with a midpoint of 36.43 USD and a margin of safety of 28.9% at the current price. The reverse DCF implies growth of -4.6% a year, against a five-year revenue CAGR of -0.5% and a five-year free cash flow per share CAGR of 2.2%, so the price already assumes a shrinking business.

What holds the case up is a return on invested capital of 50.2% against a WACC of 9.1%, free cash flow conversion of 158.3% on a trailing basis, and a five-year share count change of -7.7% a year. What would break it is a current ratio of 0.79, an Altman Z-score of 1.61, a three-year revenue CAGR of -4.2%, and an estimated next-year EPS growth of -2.7%.

Financial health

Financial strength is red: net debt to EBITDA of 1.6x and the absence of a financial-sector debt model hold it up, while the Altman Z-score of 1.61 and a current ratio of 0.79 pull it down. The quick ratio is 0.44, and interest coverage is 7.6x, which is assessed as neutral. The Altman zone is distress. The Altman model was designed for manufacturers, and HP's hardware business is close to that profile, so the reading deserves weight. Insolvency risk: low, about 1.7% by the estimate of the Ohlson model over one to two years. The company reports negative shareholders' equity, so the debt to equity ratio is not available.

Earnings quality

Earnings quality is green, supported by free cash flow conversion and a shrinking share count, with the Piotroski score of 5 out of 9 only neutral. Trailing free cash flow conversion is 158.3%, and the five-year average is 101.0%. The accrual ratio is -2.9%, which means cash earnings exceed reported earnings. Stock-based compensation is 0.8% of revenue, and free cash flow after it is 3.40 billion USD. The five-year share count CAGR is -7.7%, which reflects buybacks. The Beneish M-score is not available. Over the last eight quarters the company beat estimates four times and missed once, with an average surprise of 3.1%. Current-year estimates rose 7.4% over 90 days with no downgrades in the last 30 days, while next-year estimates rose 4.9% over 90 days.

Profitability

Profitability is green, held up by return on invested capital far above the cost of capital. ROIC is 50.2% against a WACC of 9.1%, a ROIC minus WACC value of 41.0%, and the five-year median ROIC is 58.1%. The gross margin is 19.8% against a ten-year median of 19.3%. The operating margin is 5.6% against a median of 6.6%, and the net margin is 4.1% against a median of 5.2%. Operating margin stability is 9.4%. Return on equity is not available because equity is negative. The DuPont split from the last annual report shows a net margin of 4.6% and an asset turnover of 1.32x, so the return comes from operations rather than leverage.

Growth

Growth is red, as revenue and free cash flow per share are both falling over recent years. Revenue CAGR is -4.2% over three years, -0.5% over five years and 0.7% over ten years. EPS CAGR is -3.8% over three years, 6.0% over five years and 0.7% over ten years. Free cash flow per share CAGR is -5.6% over three years, 2.2% over five years and 6.5% over ten years. Revenue grew in five of the last ten comparable years. The next-year EPS estimate implies growth of -2.7%, which is assessed as bad. Growth has been uneven rather than steadily negative over the longer horizon.

Valuation

Valuation is green, as the price is below the level implied by cash flow multiples and the margin of safety is positive. The P/E of 10.4x carries a premium of 3.0% over its ten-year median of 10.1x, and EV/EBITDA of 8.4x carries a premium of 0.4% over a median of 8.4x. Price to free cash flow of 6.6x sits at a discount of 26.9% to its median of 9.0x, and price to sales of 0.43x sits at a discount of 25.0% to a median of 0.57x. The DCF gives 39.97 USD per share, using a discount rate of 10.95% and a terminal growth rate of 2.5%. The reverse DCF implies growth of -4.6%, which is -4.1% against revenue growth and -6.8% against free cash flow per share growth over five years. The fair value is an order of magnitude built on fixed assumptions, not a price target. The dividend yield is 4.3%, and the payout is 28.2% of free cash flow.

Risks

The main risk is the weak liquidity and solvency picture. A current ratio of 0.79 and an Altman Z-score of 1.61 leave little margin if the operating cash flow weakens. Shrinking revenue, with a three-year CAGR of -4.2%, would erode the cash flow that supports the valuation. A next-year EPS estimate of -2.7% points to continued pressure on earnings. The values not available are the debt to equity ratio, return on equity, price to book and the Beneish M-score. This analysis has limits: there is no debt maturity schedule and no revenue breakdown by segment, so refinancing risk and the performance of individual businesses cannot be assessed.