Of these operating metrics, I am most impressed by the company's ability to maintain a strong 13.52% free cash flow yield. HP has continued to show resilience in its profit margins, as the company has improved on its gross profit margin, net income margin, and kept its free cash flow yield relatively stable. I believe analysts are under-expecting HP's results, as the company continues to over-delivering on consensus EPS estimates. This is not a new phenomenon for HP, as the company has beat consensus earnings expectations 8/8 quarters over the past two years.ĮPS Surprise (% Basis) (Seeking Alpha ) () In terms of EPS, the company reported $0.94, beating the consensus by $.06. On a quarterly basis, revenue was up 9% to $16.68B, beating consensus estimates by $1.25B. HP reported strong operating results in 2021, with revenue growing 12% from $56.6B in 2020 to $63.5B. The company's printing segment contributed the other 32% of revenues in 2021. HP offers printers, related supplies, services, and other solutions for commercial businesses and individuals in its other segment, printing. This segment makes up the majority of HP's business, contributing 68% to total revenue in 2021. Within the personal systems segment, HP sells personal computers, desktops, workstations, computer software, and other tangible workspace applications. HP operates in two segments: personal systems and printing. Overall, I believe investors should consider HP as a growing, profitable, cash flow generative tech stock that has ~15% of room to run. The company yields 2.84%, offering tech investors cash flow amid our current uncertain macro backdrop. I anticipate its multiple to expand as investors appreciate the ~$4B of free cash flow in 2021 and outlook of $4.5B in free cash flow for 2022. Shares are currently cheap, trading at 8.68x forward earnings and 6.4x TTM earnings. Management plans to repurchase $4B of stock in 2022, 10.80% of the company's current market cap, providing valuation support. My optimistic outlook on HP shares stems from the strong growth we have seen in the company's personal systems segment and the potential for its printing business to continue its rebound post-pandemic. This represents ~15% upside potential from current levels. ( NYSE: HPQ) is trading at a steep discount to my projected share price of $40.13. Justin Sullivan/Getty Images News Investment Thesis
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