Intrinsic value of HP - HPQ

Previous Close

$24.54

  Intrinsic Value

$23.05

stock screener

  Rating & Target

hold

-6%

Previous close

$24.54

 
Intrinsic value

$23.05

 
Up/down potential

-6%

 
Rating

hold

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 2017), $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 41.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  7.90
  7.61
  7.35
  7.11
  6.90
  6.71
  6.54
  6.39
  6.25
  6.12
  6.01
  5.91
  5.82
  5.74
  5.66
  5.60
  5.54
  5.48
  5.44
  5.39
  5.35
  5.32
  5.29
  5.26
  5.23
  5.21
  5.19
  5.17
  5.15
  5.14
Revenue, $m
  56,168
  60,443
  64,885
  69,501
  74,298
  79,285
  84,472
  89,867
  95,482
  101,329
  107,420
  113,769
  120,389
  127,296
  134,505
  142,033
  149,898
  158,118
  166,712
  175,701
  185,105
  194,948
  205,252
  216,042
  227,344
  239,185
  251,592
  264,596
  278,227
  292,519
Variable operating expenses, $m
  51,968
  55,879
  59,945
  64,169
  68,560
  73,124
  77,871
  82,808
  87,947
  93,298
  98,311
  104,121
  110,180
  116,501
  123,099
  129,989
  137,187
  144,710
  152,575
  160,801
  169,409
  178,416
  187,847
  197,722
  208,065
  218,902
  230,257
  242,158
  254,634
  267,713
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
  51,968
  55,879
  59,945
  64,169
  68,560
  73,124
  77,871
  82,808
  87,947
  93,298
  98,311
  104,121
  110,180
  116,501
  123,099
  129,989
  137,187
  144,710
  152,575
  160,801
  169,409
  178,416
  187,847
  197,722
  208,065
  218,902
  230,257
  242,158
  254,634
  267,713
Operating income, $m
  4,201
  4,563
  4,940
  5,331
  5,738
  6,161
  6,601
  7,058
  7,535
  8,030
  9,109
  9,648
  10,209
  10,795
  11,406
  12,044
  12,711
  13,408
  14,137
  14,899
  15,697
  16,532
  17,405
  18,320
  19,279
  20,283
  21,335
  22,438
  23,594
  24,806
EBITDA, $m
  5,566
  5,990
  6,430
  6,888
  7,363
  7,857
  8,371
  8,906
  9,462
  10,042
  10,645
  11,274
  11,931
  12,615
  13,329
  14,075
  14,855
  15,669
  16,521
  17,412
  18,344
  19,319
  20,340
  21,410
  22,530
  23,703
  24,933
  26,221
  27,572
  28,989
Interest expense (income), $m
  322
  422
  186
  318
  454
  596
  743
  897
  1,056
  1,222
  1,394
  1,574
  1,761
  1,956
  2,159
  2,371
  2,593
  2,824
  3,066
  3,318
  3,582
  3,859
  4,147
  4,450
  4,766
  5,098
  5,445
  5,809
  6,190
  6,589
  7,008
Earnings before tax, $m
  3,779
  4,377
  4,622
  4,877
  5,142
  5,418
  5,704
  6,003
  6,313
  6,636
  7,535
  7,887
  8,253
  8,635
  9,035
  9,451
  9,887
  10,343
  10,819
  11,317
  11,838
  12,384
  12,956
  13,554
  14,181
  14,838
  15,526
  16,248
  17,004
  17,797
Tax expense, $m
  1,020
  1,182
  1,248
  1,317
  1,388
  1,463
  1,540
  1,621
  1,705
  1,792
  2,035
  2,129
  2,228
  2,332
  2,439
  2,552
  2,670
  2,792
  2,921
  3,056
  3,196
  3,344
  3,498
  3,660
  3,829
  4,006
  4,192
  4,387
  4,591
  4,805
Net income, $m
  2,758
  3,195
  3,374
  3,560
  3,754
  3,955
  4,164
  4,382
  4,608
  4,845
  5,501
  5,757
  6,025
  6,304
  6,595
  6,900
  7,218
  7,550
  7,898
  8,261
  8,642
  9,040
  9,458
  9,894
  10,352
  10,832
  11,334
  11,861
  12,413
  12,992

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
  35,505
  38,207
  41,014
  43,932
  46,965
  50,117
  53,395
  56,806
  60,355
  64,051
  67,901
  71,914
  76,099
  80,465
  85,022
  89,781
  94,752
  99,948
  105,381
  111,063
  117,007
  123,229
  129,742
  136,563
  143,707
  151,191
  159,034
  167,254
  175,871
  184,904
Adjusted assets (=assets-cash), $m
  35,505
  38,207
  41,014
  43,932
  46,965
  50,117
  53,395
  56,806
  60,355
  64,051
  67,901
  71,914
  76,099
  80,465
  85,022
  89,781
  94,752
  99,948
  105,381
  111,063
  117,007
  123,229
  129,742
  136,563
  143,707
  151,191
  159,034
  167,254
  175,871
  184,904
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
  8,032
  8,643
  9,279
  9,939
  10,625
  11,338
  12,079
  12,851
  13,654
  14,490
  15,361
  16,269
  17,216
  18,203
  19,234
  20,311
  21,435
  22,611
  23,840
  25,125
  26,470
  27,878
  29,351
  30,894
  32,510
  34,203
  35,978
  37,837
  39,787
  41,830
Working capital, $m
  -8,088
  -8,704
  -9,343
  -10,008
  -10,699
  -11,417
  -12,164
  -12,941
  -13,749
  -14,591
  -15,468
  -16,383
  -17,336
  -18,331
  -19,369
  -20,453
  -21,585
  -22,769
  -24,007
  -25,301
  -26,655
  -28,073
  -29,556
  -31,110
  -32,738
  -34,443
  -36,229
  -38,102
  -40,065
  -42,123
Total debt, $m
  3,452
  5,884
  8,411
  11,037
  13,766
  16,603
  19,554
  22,623
  25,818
  29,144
  32,609
  36,221
  39,987
  43,916
  48,018
  52,301
  56,775
  61,451
  66,341
  71,454
  76,805
  82,404
  88,266
  94,405
  100,834
  107,570
  114,629
  122,027
  129,782
  137,912
Total liabilities, $m
  31,954
  34,386
  36,913
  39,539
  42,268
  45,105
  48,056
  51,125
  54,320
  57,646
  61,111
  64,723
  68,489
  72,418
  76,520
  80,803
  85,277
  89,953
  94,843
  99,956
  105,307
  110,906
  116,768
  122,907
  129,336
  136,072
  143,131
  150,529
  158,284
  166,414
Total equity, $m
  3,550
  3,821
  4,101
  4,393
  4,696
  5,012
  5,340
  5,681
  6,036
  6,405
  6,790
  7,191
  7,610
  8,046
  8,502
  8,978
  9,475
  9,995
  10,538
  11,106
  11,701
  12,323
  12,974
  13,656
  14,371
  15,119
  15,903
  16,725
  17,587
  18,490
Total liabilities and equity, $m
  35,504
  38,207
  41,014
  43,932
  46,964
  50,117
  53,396
  56,806
  60,356
  64,051
  67,901
  71,914
  76,099
  80,464
  85,022
  89,781
  94,752
  99,948
  105,381
  111,062
  117,008
  123,229
  129,742
  136,563
  143,707
  151,191
  159,034
  167,254
  175,871
  184,904
Debt-to-equity ratio
  0.970
  1.540
  2.050
  2.510
  2.930
  3.310
  3.660
  3.980
  4.280
  4.550
  4.800
  5.040
  5.250
  5.460
  5.650
  5.830
  5.990
  6.150
  6.300
  6.430
  6.560
  6.690
  6.800
  6.910
  7.020
  7.110
  7.210
  7.300
  7.380
  7.460
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
  2,758
  3,195
  3,374
  3,560
  3,754
  3,955
  4,164
  4,382
  4,608
  4,845
  5,501
  5,757
  6,025
  6,304
  6,595
  6,900
  7,218
  7,550
  7,898
  8,261
  8,642
  9,040
  9,458
  9,894
  10,352
  10,832
  11,334
  11,861
  12,413
  12,992
Depreciation, amort., depletion, $m
  1,365
  1,427
  1,490
  1,556
  1,625
  1,696
  1,770
  1,847
  1,928
  2,011
  1,536
  1,627
  1,722
  1,820
  1,923
  2,031
  2,144
  2,261
  2,384
  2,513
  2,647
  2,788
  2,935
  3,089
  3,251
  3,420
  3,598
  3,784
  3,979
  4,183
Funds from operations, $m
  4,124
  4,622
  4,864
  5,116
  5,379
  5,651
  5,934
  6,229
  6,536
  6,856
  7,037
  7,384
  7,746
  8,124
  8,519
  8,931
  9,361
  9,811
  10,282
  10,774
  11,289
  11,828
  12,393
  12,984
  13,603
  14,252
  14,932
  15,645
  16,392
  17,175
Change in working capital, $m
  -592
  -616
  -640
  -665
  -691
  -718
  -747
  -777
  -809
  -842
  -877
  -914
  -953
  -995
  -1,038
  -1,084
  -1,133
  -1,184
  -1,238
  -1,294
  -1,354
  -1,417
  -1,484
  -1,554
  -1,627
  -1,705
  -1,787
  -1,873
  -1,963
  -2,058
Cash from operations, $m
  4,716
  5,237
  5,504
  5,781
  6,069
  6,369
  6,681
  7,006
  7,345
  7,698
  7,914
  8,298
  8,700
  9,119
  9,557
  10,015
  10,494
  10,995
  11,519
  12,068
  12,643
  13,246
  13,876
  14,538
  15,231
  15,957
  16,719
  17,517
  18,355
  19,233
Maintenance CAPEX, $m
  -743
  -803
  -864
  -928
  -994
  -1,062
  -1,134
  -1,208
  -1,285
  -1,365
  -1,449
  -1,536
  -1,627
  -1,722
  -1,820
  -1,923
  -2,031
  -2,144
  -2,261
  -2,384
  -2,513
  -2,647
  -2,788
  -2,935
  -3,089
  -3,251
  -3,420
  -3,598
  -3,784
  -3,979
New CAPEX, $m
  -603
  -611
  -635
  -660
  -686
  -713
  -742
  -772
  -803
  -836
  -871
  -908
  -947
  -988
  -1,031
  -1,077
  -1,125
  -1,175
  -1,229
  -1,285
  -1,345
  -1,407
  -1,473
  -1,543
  -1,616
  -1,693
  -1,774
  -1,860
  -1,949
  -2,044
Cash from investing activities, $m
  -1,346
  -1,414
  -1,499
  -1,588
  -1,680
  -1,775
  -1,876
  -1,980
  -2,088
  -2,201
  -2,320
  -2,444
  -2,574
  -2,710
  -2,851
  -3,000
  -3,156
  -3,319
  -3,490
  -3,669
  -3,858
  -4,054
  -4,261
  -4,478
  -4,705
  -4,944
  -5,194
  -5,458
  -5,733
  -6,023
Free cash flow, $m
  3,370
  3,823
  4,004
  4,193
  4,389
  4,594
  4,806
  5,027
  5,257
  5,496
  5,594
  5,854
  6,126
  6,409
  6,705
  7,015
  7,338
  7,676
  8,029
  8,399
  8,786
  9,191
  9,615
  10,060
  10,525
  11,013
  11,524
  12,060
  12,622
  13,211
Issuance/(repayment) of debt, $m
  -4,367
  2,432
  2,527
  2,626
  2,729
  2,837
  2,950
  3,069
  3,194
  3,326
  3,465
  3,612
  3,766
  3,929
  4,101
  4,283
  4,474
  4,676
  4,889
  5,114
  5,350
  5,599
  5,862
  6,139
  6,430
  6,736
  7,059
  7,398
  7,755
  8,130
Issuance/(repurchase) of shares, $m
  4,200
  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  
  -167
  2,432
  2,527
  2,626
  2,729
  2,837
  2,950
  3,069
  3,194
  3,326
  3,465
  3,612
  3,766
  3,929
  4,101
  4,283
  4,474
  4,676
  4,889
  5,114
  5,350
  5,599
  5,862
  6,139
  6,430
  6,736
  7,059
  7,398
  7,755
  8,130
Total cash flow (excl. dividends), $m
  3,203
  6,254
  6,531
  6,819
  7,119
  7,431
  7,756
  8,096
  8,451
  8,822
  9,059
  9,466
  9,892
  10,339
  10,807
  11,298
  11,812
  12,352
  12,918
  13,513
  14,136
  14,790
  15,477
  16,198
  16,955
  17,749
  18,583
  19,458
  20,377
  21,341
Retained Cash Flow (-), $m
  -6,958
  -270
  -281
  -292
  -303
  -315
  -328
  -341
  -355
  -370
  -385
  -401
  -418
  -437
  -456
  -476
  -497
  -520
  -543
  -568
  -594
  -622
  -651
  -682
  -714
  -748
  -784
  -822
  -862
  -903
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
  208
  225
  242
  260
  278
  297
  317
  338
  359
  382
  405
  430
  455
  482
  509
  538
  568
  600
  632
  667
  703
  740
  780
  821
  864
  909
  957
  1,006
  1,058
  1,113
Cash available for distribution, $m
  -3,755
  5,984
  6,251
  6,527
  6,815
  7,115
  7,428
  7,755
  8,096
  8,453
  8,674
  9,065
  9,474
  9,902
  10,351
  10,822
  11,315
  11,833
  12,375
  12,944
  13,542
  14,168
  14,826
  15,516
  16,240
  17,000
  17,798
  18,636
  19,515
  20,438
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
  -3,600
  5,478
  5,440
  5,375
  5,283
  5,164
  5,018
  4,847
  4,651
  4,432
  4,119
  3,868
  3,602
  3,324
  3,039
  2,750
  2,462
  2,179
  1,905
  1,645
  1,401
  1,176
  972
  790
  632
  496
  382
  288
  213
  154
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 16
Price to Sales 0.8
Price to Book -11.9
Price to Tangible Book
Price to Cash Flow 11
Price to Free Cash Flow 12.4
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 2017 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 7.9% 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 0.4%.

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 14.3%.

Life of production assets of 10 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 -14.4%. 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 1688 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 $41.4 billion.

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