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HP (HPQ) Stock Sinks As Market Gains: What You Should Know

Zacks Equity Research

HP (HPQ) closed at $14.81 in the latest trading session, marking a -0.6% move from the prior day. This change lagged the S&P 500's daily gain of 0.9%. Meanwhile, the Dow gained 0.56%, and the Nasdaq, a tech-heavy index, added 1.13%.

Coming into today, shares of the personal computer and printer maker had lost 0.67% in the past month. In that same time, the Computer and Technology sector gained 17.65%, while the S&P 500 gained 14.3%.

Wall Street will be looking for positivity from HPQ as it approaches its next earnings report date. The company is expected to report EPS of $0.45, down 15.09% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $12.88 billion, down 8.23% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2.17 per share and revenue of $54.53 billion, which would represent changes of -3.13% and -7.19%, respectively, from the prior year.

Any recent changes to analyst estimates for HPQ should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 5.57% lower. HPQ is holding a Zacks Rank of #3 (Hold) right now.

Looking at its valuation, HPQ is holding a Forward P/E ratio of 6.87. Its industry sports an average Forward P/E of 7.48, so we one might conclude that HPQ is trading at a discount comparatively.

We can also see that HPQ currently has a PEG ratio of 3.17. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Computer - Mini computers was holding an average PEG ratio of 2.25 at yesterday's closing price.

The Computer - Mini computers industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 162, which puts it in the bottom 37% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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