Intrinsic value of HP - HPQ

Previous Close

$22.93

  Intrinsic Value

$35.95

stock screener

  Rating & Target

str. buy

+57%

Previous close

$22.93

 
Intrinsic value

$35.95

 
Up/down potential

+57%

 
Rating

str. buy

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 0001), $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 37.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  13.10
  12.29
  11.56
  10.90
  10.31
  9.78
  9.30
  8.87
  8.49
  8.14
  7.82
  7.54
  7.29
  7.06
  6.85
  6.67
  6.50
  6.35
  6.22
  6.09
  5.98
  5.89
  5.80
  5.72
  5.65
  5.58
  5.52
  5.47
  5.42
  5.38
Revenue, $m
  58,875
  66,111
  73,754
  81,797
  90,234
  99,061
  108,279
  117,888
  127,893
  138,301
  149,122
  160,368
  172,055
  184,201
  196,824
  209,948
  223,596
  237,796
  252,577
  267,970
  284,007
  300,725
  318,160
  336,352
  355,343
  375,176
  395,898
  417,558
  440,206
  463,896
Variable operating expenses, $m
  54,445
  61,067
  68,062
  75,423
  83,144
  91,223
  99,659
  108,453
  117,610
  127,135
  136,476
  146,769
  157,465
  168,580
  180,133
  192,144
  204,635
  217,631
  231,159
  245,246
  259,923
  275,223
  291,180
  307,829
  325,210
  343,361
  362,326
  382,149
  402,876
  424,557
Fixed operating expenses, $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
Total operating expenses, $m
  54,445
  61,067
  68,062
  75,423
  83,144
  91,223
  99,659
  108,453
  117,610
  127,135
  136,476
  146,769
  157,465
  168,580
  180,133
  192,144
  204,635
  217,631
  231,159
  245,246
  259,923
  275,223
  291,180
  307,829
  325,210
  343,361
  362,326
  382,149
  402,876
  424,557
Operating income, $m
  4,430
  5,044
  5,692
  6,374
  7,090
  7,838
  8,620
  9,435
  10,283
  11,166
  12,646
  13,599
  14,590
  15,620
  16,691
  17,804
  18,961
  20,165
  21,419
  22,724
  24,084
  25,501
  26,980
  28,523
  30,133
  31,815
  33,572
  35,409
  37,329
  39,338
EBITDA, $m
  5,242
  5,886
  6,567
  7,283
  8,034
  8,820
  9,641
  10,496
  11,387
  12,314
  13,277
  14,279
  15,319
  16,401
  17,525
  18,693
  19,909
  21,173
  22,489
  23,859
  25,287
  26,776
  28,328
  29,948
  31,639
  33,405
  35,250
  37,179
  39,195
  41,304
Interest expense (income), $m
  322
  422
  270
  492
  727
  974
  1,233
  1,504
  1,787
  2,082
  2,390
  2,710
  3,042
  3,388
  3,747
  4,120
  4,507
  4,911
  5,330
  5,766
  6,220
  6,693
  7,186
  7,699
  8,235
  8,794
  9,377
  9,987
  10,623
  11,289
  11,984
Earnings before tax, $m
  4,008
  4,774
  5,200
  5,648
  6,116
  6,605
  7,116
  7,647
  8,201
  8,776
  9,936
  10,557
  11,203
  11,874
  12,571
  13,296
  14,050
  14,835
  15,652
  16,504
  17,391
  18,316
  19,281
  20,288
  21,339
  22,438
  23,586
  24,786
  26,041
  27,354
Tax expense, $m
  1,082
  1,289
  1,404
  1,525
  1,651
  1,783
  1,921
  2,065
  2,214
  2,369
  2,683
  2,850
  3,025
  3,206
  3,394
  3,590
  3,794
  4,006
  4,226
  4,456
  4,695
  4,945
  5,206
  5,478
  5,762
  6,058
  6,368
  6,692
  7,031
  7,386
Net income, $m
  2,926
  3,485
  3,796
  4,123
  4,465
  4,822
  5,194
  5,583
  5,986
  6,406
  7,253
  7,707
  8,178
  8,668
  9,177
  9,706
  10,257
  10,830
  11,426
  12,048
  12,695
  13,370
  14,075
  14,810
  15,578
  16,379
  17,217
  18,094
  19,010
  19,968

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
Total assets, $m
  37,216
  41,790
  46,621
  51,705
  57,038
  62,618
  68,444
  74,518
  80,842
  87,421
  94,261
  101,371
  108,758
  116,435
  124,415
  132,710
  141,338
  150,314
  159,657
  169,387
  179,524
  190,091
  201,112
  212,612
  224,616
  237,153
  250,252
  263,943
  278,259
  293,234
Adjusted assets (=assets-cash), $m
  37,216
  41,790
  46,621
  51,705
  57,038
  62,618
  68,444
  74,518
  80,842
  87,421
  94,261
  101,371
  108,758
  116,435
  124,415
  132,710
  141,338
  150,314
  159,657
  169,387
  179,524
  190,091
  201,112
  212,612
  224,616
  237,153
  250,252
  263,943
  278,259
  293,234
Revenue / Adjusted assets
  1.582
  1.582
  1.582
  1.582
  1.582
  1.582
  1.582
  1.582
  1.582
  1.582
  1.582
  1.582
  1.582
  1.582
  1.582
  1.582
  1.582
  1.582
  1.582
  1.582
  1.582
  1.582
  1.582
  1.582
  1.582
  1.582
  1.582
  1.582
  1.582
  1.582
Average production assets, $m
  5,240
  5,884
  6,564
  7,280
  8,031
  8,816
  9,637
  10,492
  11,382
  12,309
  13,272
  14,273
  15,313
  16,394
  17,517
  18,685
  19,900
  21,164
  22,479
  23,849
  25,277
  26,764
  28,316
  29,935
  31,625
  33,391
  35,235
  37,163
  39,178
  41,287
Working capital, $m
  -6,830
  -7,669
  -8,555
  -9,488
  -10,467
  -11,491
  -12,560
  -13,675
  -14,836
  -16,043
  -17,298
  -18,603
  -19,958
  -21,367
  -22,832
  -24,354
  -25,937
  -27,584
  -29,299
  -31,084
  -32,945
  -34,884
  -36,907
  -39,017
  -41,220
  -43,520
  -45,924
  -48,437
  -51,064
  -53,812
Total debt, $m
  4,992
  9,109
  13,457
  18,032
  22,832
  27,854
  33,098
  38,564
  44,256
  50,177
  56,333
  62,732
  69,380
  76,290
  83,471
  90,937
  98,702
  106,780
  115,189
  123,946
  133,070
  142,580
  152,499
  162,849
  173,652
  184,936
  196,725
  209,047
  221,931
  235,408
Total liabilities, $m
  33,494
  37,611
  41,959
  46,534
  51,334
  56,356
  61,600
  67,066
  72,758
  78,679
  84,835
  91,234
  97,882
  104,792
  111,973
  119,439
  127,204
  135,282
  143,691
  152,448
  161,572
  171,082
  181,001
  191,351
  202,154
  213,438
  225,227
  237,549
  250,433
  263,910
Total equity, $m
  3,722
  4,179
  4,662
  5,170
  5,704
  6,262
  6,844
  7,452
  8,084
  8,742
  9,426
  10,137
  10,876
  11,644
  12,441
  13,271
  14,134
  15,031
  15,966
  16,939
  17,952
  19,009
  20,111
  21,261
  22,462
  23,715
  25,025
  26,394
  27,826
  29,323
Total liabilities and equity, $m
  37,216
  41,790
  46,621
  51,704
  57,038
  62,618
  68,444
  74,518
  80,842
  87,421
  94,261
  101,371
  108,758
  116,436
  124,414
  132,710
  141,338
  150,313
  159,657
  169,387
  179,524
  190,091
  201,112
  212,612
  224,616
  237,153
  250,252
  263,943
  278,259
  293,233
Debt-to-equity ratio
  1.340
  2.180
  2.890
  3.490
  4.000
  4.450
  4.840
  5.180
  5.470
  5.740
  5.980
  6.190
  6.380
  6.550
  6.710
  6.850
  6.980
  7.100
  7.210
  7.320
  7.410
  7.500
  7.580
  7.660
  7.730
  7.800
  7.860
  7.920
  7.980
  8.030
Adjusted equity ratio
  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
  2,926
  3,485
  3,796
  4,123
  4,465
  4,822
  5,194
  5,583
  5,986
  6,406
  7,253
  7,707
  8,178
  8,668
  9,177
  9,706
  10,257
  10,830
  11,426
  12,048
  12,695
  13,370
  14,075
  14,810
  15,578
  16,379
  17,217
  18,094
  19,010
  19,968
Depreciation, amort., depletion, $m
  812
  842
  875
  909
  945
  982
  1,021
  1,062
  1,104
  1,148
  632
  680
  729
  781
  834
  890
  948
  1,008
  1,070
  1,136
  1,204
  1,274
  1,348
  1,425
  1,506
  1,590
  1,678
  1,770
  1,866
  1,966
Funds from operations, $m
  3,738
  4,328
  4,671
  5,032
  5,409
  5,804
  6,216
  6,644
  7,091
  7,555
  7,885
  8,386
  8,907
  9,448
  10,011
  10,596
  11,204
  11,838
  12,497
  13,183
  13,899
  14,645
  15,423
  16,235
  17,084
  17,970
  18,895
  19,863
  20,875
  21,934
Change in working capital, $m
  -791
  -839
  -887
  -933
  -979
  -1,024
  -1,069
  -1,115
  -1,161
  -1,207
  -1,255
  -1,305
  -1,356
  -1,409
  -1,464
  -1,522
  -1,583
  -1,647
  -1,715
  -1,786
  -1,860
  -1,939
  -2,022
  -2,110
  -2,203
  -2,301
  -2,404
  -2,513
  -2,627
  -2,748
Cash from operations, $m
  4,529
  5,167
  5,558
  5,965
  6,388
  6,828
  7,285
  7,759
  8,251
  8,762
  9,140
  9,691
  10,263
  10,857
  11,475
  12,118
  12,788
  13,485
  14,211
  14,969
  15,759
  16,584
  17,446
  18,346
  19,287
  20,270
  21,299
  22,376
  23,503
  24,682
Maintenance CAPEX, $m
  -220
  -250
  -280
  -313
  -347
  -382
  -420
  -459
  -500
  -542
  -586
  -632
  -680
  -729
  -781
  -834
  -890
  -948
  -1,008
  -1,070
  -1,136
  -1,204
  -1,274
  -1,348
  -1,425
  -1,506
  -1,590
  -1,678
  -1,770
  -1,866
New CAPEX, $m
  -622
  -644
  -680
  -716
  -751
  -786
  -820
  -855
  -890
  -926
  -963
  -1,001
  -1,040
  -1,081
  -1,123
  -1,168
  -1,215
  -1,264
  -1,315
  -1,370
  -1,427
  -1,488
  -1,552
  -1,619
  -1,690
  -1,765
  -1,844
  -1,928
  -2,016
  -2,108
Cash from investing activities, $m
  -842
  -894
  -960
  -1,029
  -1,098
  -1,168
  -1,240
  -1,314
  -1,390
  -1,468
  -1,549
  -1,633
  -1,720
  -1,810
  -1,904
  -2,002
  -2,105
  -2,212
  -2,323
  -2,440
  -2,563
  -2,692
  -2,826
  -2,967
  -3,115
  -3,271
  -3,434
  -3,606
  -3,786
  -3,974
Free cash flow, $m
  3,687
  4,274
  4,597
  4,936
  5,290
  5,660
  6,045
  6,445
  6,861
  7,294
  7,591
  8,058
  8,543
  9,047
  9,571
  10,116
  10,683
  11,273
  11,888
  12,528
  13,196
  13,893
  14,619
  15,378
  16,171
  16,999
  17,865
  18,770
  19,717
  20,708
Issuance/(repayment) of debt, $m
  -2,827
  4,116
  4,348
  4,576
  4,800
  5,022
  5,244
  5,466
  5,692
  5,921
  6,156
  6,398
  6,649
  6,909
  7,181
  7,466
  7,765
  8,079
  8,409
  8,757
  9,124
  9,511
  9,919
  10,349
  10,804
  11,283
  11,789
  12,322
  12,884
  13,477
Issuance/(repurchase) of shares, $m
  4,204
  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  
  1,377
  4,116
  4,348
  4,576
  4,800
  5,022
  5,244
  5,466
  5,692
  5,921
  6,156
  6,398
  6,649
  6,909
  7,181
  7,466
  7,765
  8,079
  8,409
  8,757
  9,124
  9,511
  9,919
  10,349
  10,804
  11,283
  11,789
  12,322
  12,884
  13,477
Total cash flow (excl. dividends), $m
  5,064
  8,390
  8,945
  9,512
  10,090
  10,682
  11,288
  11,911
  12,553
  13,215
  13,747
  14,456
  15,192
  15,957
  16,753
  17,582
  18,448
  19,352
  20,297
  21,285
  22,320
  23,403
  24,538
  25,728
  26,975
  28,282
  29,654
  31,092
  32,602
  34,186
Retained Cash Flow (-), $m
  -7,130
  -457
  -483
  -508
  -533
  -558
  -583
  -607
  -632
  -658
  -684
  -711
  -739
  -768
  -798
  -830
  -863
  -898
  -934
  -973
  -1,014
  -1,057
  -1,102
  -1,150
  -1,200
  -1,254
  -1,310
  -1,369
  -1,432
  -1,497
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
  -2,066
  7,933
  8,462
  9,003
  9,557
  10,124
  10,706
  11,304
  11,921
  12,557
  13,063
  13,745
  14,453
  15,189
  15,955
  16,753
  17,585
  18,454
  19,362
  20,312
  21,306
  22,347
  23,436
  24,578
  25,774
  27,029
  28,344
  29,723
  31,170
  32,688
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
  -1,981
  7,262
  7,364
  7,413
  7,408
  7,347
  7,233
  7,065
  6,848
  6,583
  6,204
  5,866
  5,495
  5,099
  4,684
  4,257
  3,826
  3,399
  2,981
  2,581
  2,204
  1,854
  1,536
  1,252
  1,003
  789
  608
  460
  340
  246
Current shareholders' claim on cash, %
  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. is a provider of products, technologies, software, solutions and services to individual consumers, small- and medium-sized businesses, and enterprises, including customers in the government, health and education sectors. The Company provides personal computing and other access devices, imaging and printing products, and related technologies, solutions and services. Its segments include Personal Systems, Printing and Corporate Investments. The Personal Systems segment provides Commercial personal computers (PCs), Consumer PCs, workstations, thin clients, Commercial tablets and mobility devices, retail point-of-sale systems, displays and other 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. The Corporate Investments segment includes the operations of HP Labs and certain business incubation projects.

FINANCIAL RATIOS  of  HP (HPQ)

Valuation Ratios
P/E Ratio 15
Price to Sales 0.7
Price to Book -11.1
Price to Tangible Book
Price to Cash Flow 10.3
Price to Free Cash Flow 11.6
Growth Rates
Sales Growth Rate 7.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -7.2%
Cap. Spend. - 3 Yr. Gr. Rate -36.4%
Financial Strength
Quick Ratio 8
Current Ratio 0.1
LT Debt to Equity -198%
Total Debt to Equity -229.4%
Interest Coverage 11
Management Effectiveness
Return On Assets 9%
Ret/ On Assets - 3 Yr. Avg. 5.9%
Return On Total Capital 68.9%
Ret/ On T. Cap. - 3 Yr. Avg. 30.8%
Return On Equity -69.2%
Return On Equity - 3 Yr. Avg. -10.5%
Asset Turnover 1.7
Profitability Ratios
Gross Margin 18.4%
Gross Margin - 3 Yr. Avg. 18.8%
EBITDA Margin 7.6%
EBITDA Margin - 3 Yr. Avg. 10.8%
Operating Margin 6.8%
Oper. Margin - 3 Yr. Avg. 7.2%
Pre-Tax Margin 6.3%
Pre-Tax Margin - 3 Yr. Avg. 7%
Net Profit Margin 4.9%
Net Profit Margin - 3 Yr. Avg. 6.3%
Effective Tax Rate 22.9%
Eff/ Tax Rate - 3 Yr. Avg. 15.6%
Payout Ratio 35.4%

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 $52056 million for the last fiscal year's total revenue generated by HP. The default revenue input number comes from 0001 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 13.1% 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 92.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 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 5.4% 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 8.9%.

Life of production assets of 21 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 -11.6%. 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 - $-3408 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 1637.47 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 $37.5 billion.

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