Are Investors Undervaluing HP (HPQ) Right Now?
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.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
HP (HPQ) is a stock many investors are watching right now. HPQ is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 10.34. This compares to its industry's average Forward P/E of 25.21. Over the last 12 months, HPQ's Forward P/E has been as high as 10.72 and as low as 6.21, with a median of 8.57.
Investors should also note that HPQ holds a PEG ratio of 1.30. 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 2.05. Over the last 12 months, HPQ's PEG has been as high as 5.84 and as low as 1.11, with a median of 3.47.
Finally, we should also recognize that HPQ has a P/CF ratio of 11.14. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 28.44. Over the past year, HPQ's P/CF has been as high as 11.14 and as low as 5.33, with a median of 8.14.
Value investors will likely look at more than just these metrics, but the above data helps show that HP is likely undervalued currently. And when considering the strength of its earnings outlook, HPQ sticks out at as one of the market's strongest value stocks.
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