Intrinsic value of HP - HPQ

Previous Close

$18.97

  Intrinsic Value

$13.95

stock screener

  Rating & Target

sell

-26%

  Value-price divergence*

-113%

Previous close

$18.97

 
Intrinsic value

$13.95

 
Up/down potential

-26%

 
Rating

sell

 
Value-price divergence*

-113%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of HPQ stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 31.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -6.27
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  48,238
  49,203
  50,334
  51,628
  53,080
  54,690
  56,455
  58,378
  60,459
  62,701
  65,108
  67,682
  70,429
  73,354
  76,462
  79,760
  83,256
  86,956
  90,868
  95,003
  99,368
  103,974
  108,831
  113,951
  119,346
  125,027
  131,009
  137,306
  143,932
  150,902
  158,234
Variable operating expenses, $m
 
  43,533
  44,522
  45,651
  46,920
  48,325
  49,867
  51,546
  53,364
  55,322
  57,424
  59,110
  61,509
  64,063
  66,778
  69,658
  72,711
  75,942
  79,359
  82,970
  86,782
  90,805
  95,047
  99,519
  104,230
  109,192
  114,416
  119,915
  125,702
  131,790
  138,193
Fixed operating expenses, $m
 
  2,101
  2,154
  2,208
  2,263
  2,319
  2,377
  2,437
  2,498
  2,560
  2,624
  2,690
  2,757
  2,826
  2,897
  2,969
  3,043
  3,119
  3,197
  3,277
  3,359
  3,443
  3,529
  3,617
  3,708
  3,801
  3,896
  3,993
  4,093
  4,195
  4,300
Total operating expenses, $m
  44,689
  45,634
  46,676
  47,859
  49,183
  50,644
  52,244
  53,983
  55,862
  57,882
  60,048
  61,800
  64,266
  66,889
  69,675
  72,627
  75,754
  79,061
  82,556
  86,247
  90,141
  94,248
  98,576
  103,136
  107,938
  112,993
  118,312
  123,908
  129,795
  135,985
  142,493
Operating income, $m
  3,549
  3,568
  3,659
  3,769
  3,898
  4,045
  4,211
  4,395
  4,598
  4,819
  5,060
  5,882
  6,163
  6,465
  6,788
  7,133
  7,501
  7,894
  8,312
  8,755
  9,226
  9,726
  10,255
  10,815
  11,408
  12,035
  12,697
  13,397
  14,137
  14,917
  15,741
EBITDA, $m
  3,881
  4,205
  4,297
  4,409
  4,540
  4,690
  4,858
  5,045
  5,251
  5,476
  5,720
  5,984
  6,269
  6,575
  6,903
  7,253
  7,627
  8,025
  8,449
  8,898
  9,376
  9,882
  10,419
  10,987
  11,588
  12,223
  12,895
  13,604
  14,354
  15,145
  15,980
Interest expense (income), $m
  318
  279
  23
  48
  76
  108
  144
  183
  226
  272
  322
  375
  432
  493
  558
  627
  700
  778
  860
  946
  1,038
  1,135
  1,237
  1,345
  1,458
  1,578
  1,704
  1,837
  1,976
  2,123
  2,278
Earnings before tax, $m
  3,761
  3,289
  3,637
  3,721
  3,822
  3,937
  4,067
  4,211
  4,372
  4,547
  4,738
  5,507
  5,731
  5,971
  6,230
  6,506
  6,801
  7,116
  7,452
  7,809
  8,188
  8,591
  9,018
  9,470
  9,949
  10,457
  10,993
  11,561
  12,161
  12,794
  13,463
Tax expense, $m
  1,095
  888
  982
  1,005
  1,032
  1,063
  1,098
  1,137
  1,180
  1,228
  1,279
  1,487
  1,547
  1,612
  1,682
  1,757
  1,836
  1,921
  2,012
  2,108
  2,211
  2,319
  2,435
  2,557
  2,686
  2,823
  2,968
  3,121
  3,283
  3,454
  3,635
Net income, $m
  2,496
  2,401
  2,655
  2,717
  2,790
  2,874
  2,969
  3,074
  3,191
  3,319
  3,459
  4,020
  4,184
  4,359
  4,548
  4,749
  4,965
  5,195
  5,440
  5,700
  5,977
  6,271
  6,583
  6,913
  7,263
  7,633
  8,025
  8,439
  8,877
  9,340
  9,828

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  6,288
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  28,987
  29,569
  30,249
  31,026
  31,899
  32,866
  33,927
  35,083
  36,334
  37,681
  39,127
  40,674
  42,325
  44,083
  45,951
  47,933
  50,033
  52,257
  54,608
  57,093
  59,716
  62,484
  65,403
  68,480
  71,722
  75,137
  78,732
  82,516
  86,497
  90,686
  95,093
Adjusted assets (=assets-cash), $m
  22,699
  29,569
  30,249
  31,026
  31,899
  32,866
  33,927
  35,083
  36,334
  37,681
  39,127
  40,674
  42,325
  44,083
  45,951
  47,933
  50,033
  52,257
  54,608
  57,093
  59,716
  62,484
  65,403
  68,480
  71,722
  75,137
  78,732
  82,516
  86,497
  90,686
  95,093
Revenue / Adjusted assets
  2.125
  1.664
  1.664
  1.664
  1.664
  1.664
  1.664
  1.664
  1.664
  1.664
  1.664
  1.664
  1.664
  1.664
  1.664
  1.664
  1.664
  1.664
  1.664
  1.664
  1.664
  1.664
  1.664
  1.664
  1.664
  1.664
  1.664
  1.664
  1.664
  1.664
  1.664
Average production assets, $m
  1,614
  1,624
  1,661
  1,704
  1,752
  1,805
  1,863
  1,926
  1,995
  2,069
  2,149
  2,234
  2,324
  2,421
  2,523
  2,632
  2,747
  2,870
  2,999
  3,135
  3,279
  3,431
  3,591
  3,760
  3,938
  4,126
  4,323
  4,531
  4,750
  4,980
  5,222
Working capital, $m
  -340
  -4,920
  -5,033
  -5,163
  -5,308
  -5,469
  -5,646
  -5,838
  -6,046
  -6,270
  -6,511
  -6,768
  -7,043
  -7,335
  -7,646
  -7,976
  -8,326
  -8,696
  -9,087
  -9,500
  -9,937
  -10,397
  -10,883
  -11,395
  -11,935
  -12,503
  -13,101
  -13,731
  -14,393
  -15,090
  -15,823
Total debt, $m
  6,813
  549
  1,161
  1,861
  2,646
  3,517
  4,472
  5,512
  6,637
  7,850
  9,151
  10,544
  12,030
  13,611
  15,293
  17,077
  18,967
  20,968
  23,085
  25,321
  27,682
  30,173
  32,800
  35,569
  38,487
  41,560
  44,795
  48,201
  51,785
  55,555
  59,520
Total liabilities, $m
  32,876
  26,612
  27,224
  27,924
  28,709
  29,580
  30,535
  31,575
  32,700
  33,913
  35,214
  36,607
  38,093
  39,674
  41,356
  43,140
  45,030
  47,031
  49,148
  51,384
  53,745
  56,236
  58,863
  61,632
  64,550
  67,623
  70,858
  74,264
  77,848
  81,618
  85,583
Total equity, $m
  -3,889
  2,957
  3,025
  3,103
  3,190
  3,287
  3,393
  3,508
  3,633
  3,768
  3,913
  4,067
  4,233
  4,408
  4,595
  4,793
  5,003
  5,226
  5,461
  5,709
  5,972
  6,248
  6,540
  6,848
  7,172
  7,514
  7,873
  8,252
  8,650
  9,069
  9,509
Total liabilities and equity, $m
  28,987
  29,569
  30,249
  31,027
  31,899
  32,867
  33,928
  35,083
  36,333
  37,681
  39,127
  40,674
  42,326
  44,082
  45,951
  47,933
  50,033
  52,257
  54,609
  57,093
  59,717
  62,484
  65,403
  68,480
  71,722
  75,137
  78,731
  82,516
  86,498
  90,687
  95,092
Debt-to-equity ratio
  -1.752
  0.190
  0.380
  0.600
  0.830
  1.070
  1.320
  1.570
  1.830
  2.080
  2.340
  2.590
  2.840
  3.090
  3.330
  3.560
  3.790
  4.010
  4.230
  4.430
  4.640
  4.830
  5.020
  5.190
  5.370
  5.530
  5.690
  5.840
  5.990
  6.130
  6.260
Adjusted equity ratio
  -0.447
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,496
  2,401
  2,655
  2,717
  2,790
  2,874
  2,969
  3,074
  3,191
  3,319
  3,459
  4,020
  4,184
  4,359
  4,548
  4,749
  4,965
  5,195
  5,440
  5,700
  5,977
  6,271
  6,583
  6,913
  7,263
  7,633
  8,025
  8,439
  8,877
  9,340
  9,828
Depreciation, amort., depletion, $m
  332
  636
  638
  640
  642
  645
  647
  650
  653
  657
  660
  102
  106
  111
  115
  120
  125
  131
  137
  143
  150
  157
  164
  172
  180
  188
  197
  207
  217
  227
  238
Funds from operations, $m
  2,893
  3,037
  3,293
  3,357
  3,432
  3,518
  3,616
  3,725
  3,845
  3,976
  4,119
  4,122
  4,290
  4,470
  4,663
  4,870
  5,090
  5,326
  5,577
  5,844
  6,127
  6,428
  6,747
  7,085
  7,443
  7,822
  8,223
  8,646
  9,094
  9,567
  10,067
Change in working capital, $m
  -337
  -96
  -113
  -129
  -145
  -161
  -177
  -192
  -208
  -224
  -241
  -257
  -275
  -292
  -311
  -330
  -350
  -370
  -391
  -413
  -437
  -461
  -486
  -512
  -539
  -568
  -598
  -630
  -663
  -697
  -733
Cash from operations, $m
  3,230
  3,134
  3,406
  3,486
  3,577
  3,679
  3,792
  3,917
  4,053
  4,200
  4,360
  4,380
  4,564
  4,762
  4,974
  5,199
  5,440
  5,696
  5,968
  6,257
  6,564
  6,888
  7,233
  7,597
  7,982
  8,390
  8,821
  9,276
  9,757
  10,264
  10,800
Maintenance CAPEX, $m
  0
  -74
  -74
  -76
  -78
  -80
  -82
  -85
  -88
  -91
  -94
  -98
  -102
  -106
  -111
  -115
  -120
  -125
  -131
  -137
  -143
  -150
  -157
  -164
  -172
  -180
  -188
  -197
  -207
  -217
  -227
New CAPEX, $m
  -433
  -10
  -37
  -43
  -48
  -53
  -58
  -63
  -69
  -74
  -79
  -85
  -91
  -97
  -103
  -109
  -115
  -122
  -129
  -136
  -144
  -152
  -160
  -169
  -178
  -187
  -197
  -208
  -219
  -230
  -242
Cash from investing activities, $m
  48
  -84
  -111
  -119
  -126
  -133
  -140
  -148
  -157
  -165
  -173
  -183
  -193
  -203
  -214
  -224
  -235
  -247
  -260
  -273
  -287
  -302
  -317
  -333
  -350
  -367
  -385
  -405
  -426
  -447
  -469
Free cash flow, $m
  3,278
  3,050
  3,294
  3,368
  3,451
  3,546
  3,652
  3,768
  3,896
  4,035
  4,186
  4,197
  4,372
  4,559
  4,761
  4,975
  5,204
  5,448
  5,708
  5,984
  6,276
  6,587
  6,916
  7,264
  7,633
  8,023
  8,435
  8,871
  9,331
  9,817
  10,331
Issuance/(repayment) of debt, $m
  -2,087
  -6,264
  612
  700
  785
  870
  955
  1,040
  1,126
  1,213
  1,301
  1,392
  1,486
  1,582
  1,681
  1,784
  1,891
  2,001
  2,116
  2,236
  2,361
  2,491
  2,627
  2,769
  2,918
  3,073
  3,236
  3,406
  3,584
  3,770
  3,966
Issuance/(repurchase) of shares, $m
  -1,113
  4,445
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -13,565
  -1,819
  612
  700
  785
  870
  955
  1,040
  1,126
  1,213
  1,301
  1,392
  1,486
  1,582
  1,681
  1,784
  1,891
  2,001
  2,116
  2,236
  2,361
  2,491
  2,627
  2,769
  2,918
  3,073
  3,236
  3,406
  3,584
  3,770
  3,966
Total cash flow (excl. dividends), $m
  -10,287
  1,231
  3,907
  4,067
  4,237
  4,417
  4,607
  4,808
  5,022
  5,248
  5,487
  5,589
  5,857
  6,141
  6,442
  6,759
  7,095
  7,450
  7,824
  8,220
  8,637
  9,078
  9,543
  10,033
  10,550
  11,096
  11,671
  12,276
  12,915
  13,587
  14,296
Retained Cash Flow (-), $m
  31,657
  -6,846
  -68
  -78
  -87
  -97
  -106
  -116
  -125
  -135
  -145
  -155
  -165
  -176
  -187
  -198
  -210
  -222
  -235
  -248
  -262
  -277
  -292
  -308
  -324
  -341
  -360
  -378
  -398
  -419
  -441
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -5,615
  3,839
  3,989
  4,150
  4,320
  4,501
  4,693
  4,897
  5,113
  5,343
  5,434
  5,692
  5,966
  6,255
  6,561
  6,885
  7,227
  7,589
  7,971
  8,375
  8,801
  9,251
  9,726
  10,226
  10,754
  11,311
  11,898
  12,517
  13,169
  13,855
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  -5,383
  3,514
  3,472
  3,417
  3,348
  3,266
  3,170
  3,060
  2,937
  2,801
  2,581
  2,429
  2,268
  2,100
  1,926
  1,750
  1,573
  1,398
  1,227
  1,064
  910
  768
  637
  521
  418
  330
  255
  194
  144
  104
Current shareholders' claim on cash, %
  100
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

HP Inc. provides 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 worldwide. It operates through Personal Systems and Printing segments. The Personal Systems segment offers commercial personal computers (PCs), consumer PCs, workstations, thin clients, commercial tablets and mobility devices, retail point-of-sale systems, displays and other related accessories, software, support, and services for the commercial and consumer markets. The Printing segment provides consumer and commercial printer hardware, supplies, media, solutions, and services, as well as scanning devices; and laserJet and enterprise, inkjet and printing, graphics, and 3D printing solutions. The company was formerly known as Hewlett-Packard Company and changed its name to HP Inc. in October 2015. HP Inc. was founded in 1939 and is headquartered in Palo Alto, California.

FINANCIAL RATIOS  of  HP (HPQ)

Valuation Ratios
P/E Ratio 13
Price to Sales 0.7
Price to Book -8.4
Price to Tangible Book
Price to Cash Flow 10.1
Price to Free Cash Flow 11.6
Growth Rates
Sales Growth Rate -6.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -88%
Cap. Spend. - 3 Yr. Gr. Rate -33%
Financial Strength
Quick Ratio 81
Current Ratio 0.1
LT Debt to Equity -173.2%
Total Debt to Equity -175.2%
Interest Coverage 13
Management Effectiveness
Return On Assets 4%
Ret/ On Assets - 3 Yr. Avg. 4.7%
Return On Total Capital 12.6%
Ret/ On T. Cap. - 3 Yr. Avg. 11.3%
Return On Equity 20.9%
Return On Equity - 3 Yr. Avg. 18.7%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 18.7%
Gross Margin - 3 Yr. Avg. 19.3%
EBITDA Margin 9.1%
EBITDA Margin - 3 Yr. Avg. 13.5%
Operating Margin 7.4%
Oper. Margin - 3 Yr. Avg. 7.5%
Pre-Tax Margin 7.8%
Pre-Tax Margin - 3 Yr. Avg. 7.2%
Net Profit Margin 5.2%
Net Profit Margin - 3 Yr. Avg. 7.6%
Effective Tax Rate 29.1%
Eff/ Tax Rate - 3 Yr. Avg. 16.1%
Payout Ratio 34.4%

HPQ stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HPQ stock intrinsic value calculation we used $48238 million for the last fiscal year's total revenue generated by HP. The default revenue input number comes from 2016 income statement of HP. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our HPQ stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for HPQ is calculated based on our internal credit rating of HP, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of HP.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of HPQ stock the variable cost ratio is equal to 88.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $2050 million in the base year in the intrinsic value calculation for HPQ stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.1% for HP.

Corporate tax rate of 27% is the nominal tax rate for HP. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the HPQ stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for HPQ are equal to 3.3%.

Life of production assets of 21.9 years is the average useful life of capital assets used in HP operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for HPQ is equal to -10%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $-3889 million for HP - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 1664.02 million for HP is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of HP at the current share price and the inputted number of shares is $31.6 billion.

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COMPANY NEWS

▶ How Hewlett-Packard Is Planning to Improve PC Sales   [Aug-16-17 03:06PM  Market Realist]
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▶ SIGGRAPH 2017: Bring VR Into The Next Phase   [Aug-09-17 07:33PM  Forbes]
▶ HP Reinvents Retail with New Point-of-Sale System   [Aug-02-17 09:00AM  GlobeNewswire]
▶ HP, Inc. Value Analysis (NYSE:HPQ) : July 31, 2017   [Jul-31-17 06:29PM  Capital Cube]
▶ HPE CEO Meg Whitman says she wont be Ubers next CEO   [Jul-28-17 08:30AM  MarketWatch]
▶ Meg Whitman steps down from HP Inc. board   [08:18AM  CNBC Videos]
▶ Meg Whitman Steps Down From HP Incs Board   [Jul-26-17 07:03PM  Fortune]
▶ [$$] Whitman Steps Down From HP Board   [06:45PM  The Wall Street Journal]
▶ Meg Whitman leaves HP's board   [04:49PM  ZDNet]
▶ Meg Whitman steps down as HP chairwoman   [04:39PM  MarketWatch]
▶ Meg Whitman Steps Down From HP Board   [04:28PM  TheStreet.com]
▶ Meg Whitman Steps Down From HP Board   [04:20PM  Bloomberg]
▶ Meg Whitman is stepping down from HP's board   [04:15PM  Business Insider]
▶ Meg Whitman steps down from HP's board   [09:35AM  TechCrunch]
▶ HP Inc. Board Declares Dividend   [Jul-25-17 06:37PM  GlobeNewswire]
▶ Hate Risk? You'll Love These 3 Tech Stocks   [Jul-17-17 09:32PM  Motley Fool]
▶ 3 Stocks That Are Ridiculously Cheap Right Now   [Jul-16-17 08:18PM  Motley Fool]
▶ Computers are getting more expensive, and heres why   [Jul-15-17 10:51AM  MarketWatch]
▶ PC Market Downturn Continues Into Its Sixth Year   [Jul-14-17 12:18PM  Benzinga]
▶ July 10, 2017 iQ100 leaders   [Jul-10-17 04:56PM  CNBC Videos]
▶ Competition In 3D Printer Field Mounts As 3D Systems Rated Sell   [Jul-03-17 01:37PM  Investor's Business Daily]
▶ ETFs with exposure to HP, Inc. : June 30, 2017   [Jun-30-17 03:01PM  Capital Cube]
▶ Stratasys Faces Increased Competition, Product Holes: Analyst   [Jun-26-17 04:33PM  Investor's Business Daily]
▶ iQ100 up over twenty percent this year   [02:38PM  CNBC Videos]
▶ GE's Big 3D Printing Moves You May Have Missed During The Paris Air Show   [Jun-23-17 04:17PM  Investor's Business Daily]
▶ HP's Rapid Growth In 3D Printers Threatens Stratasys, 3D Systems   [Jun-21-17 04:27PM  Investor's Business Daily]
▶ Thread forms partnership with HP   [08:15AM  American City Business Journals]
▶ An Open Letter To Our Daughters   [11:28AM  Forbes]
▶ 3 Value Stocks You Probably Haven't Considered   [Jun-08-17 08:06PM  Motley Fool]
▶ A Rooney Rule for Law Firms? Project Aims to Promote More Women   [Jun-07-17 01:23PM  The Wall Street Journal]
Stock chart of HPQ Financial statements of HPQ
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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