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Is HP (HPQ) Stock Undervalued Right Now?

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Zacks Equity Research
·2 min read
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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company to watch right now is HP (HPQ). HPQ is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 9.17 right now. For comparison, its industry sports an average P/E of 27.24. Over the past year, HPQ's Forward P/E has been as high as 10.12 and as low as 5.09, with a median of 8.30.

We also note that HPQ holds a PEG ratio of 1.69. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. HPQ's PEG compares to its industry's average PEG of 3.07. Within the past year, HPQ's PEG has been as high as 5.84 and as low as 1.57, with a median of 3.79.

Finally, our model also underscores that HPQ has a P/CF ratio of 9.38. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 19.18. Within the past 12 months, HPQ's P/CF has been as high as 9.67 and as low as 5.04, with a median of 7.69.

These are only a few of the key metrics included in HP's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, HPQ looks like an impressive value stock at the moment.


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Zacks Investment Research