HP Inc. (HPQ) | Investment Case

1. Company Snapshot

1.a. Company Description

HP Inc.provides personal computing and other access devices, imaging and printing products, and related technologies, solutions, and services in the United States and internationally.The company operates through three segments: Personal Systems, Printing, and Corporate Investments.

The Personal Systems segment offers commercial and consumer desktop and notebook personal computers, workstations, thin clients, commercial mobility devices, retail point-of-sale systems, displays and peripherals, software, support, and services.The Printing segment provides consumer and commercial printer hardware, supplies, solutions, and services.The Corporate Investments segment is involved in the HP Labs and business incubation, and investment projects.

It serves individual consumers, small- and medium-sized businesses, and large enterprises, including customers in the government, health, and education sectors.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.

Show Full description

1.b. Last Insights on HPQ

HP Inc.'s recent performance was negatively impacted by weak guidance and macro pressures. The company's printing segment faced secular fears and declining margins. A downgrade to "underweight" by Barclays, citing concerns over PC demand softness, also affected the stock. Additionally, increasing memory expenses and diminishing printing margins contributed to the weakness. HP's layoffs and restructuring efforts, while aimed at cost-cutting, may not be enough to offset these challenges. Robust free cash flow and a high dividend yield, however, remain a positive factor.

1.c. Company Highlights

Last Price	18.99
Change Percentage	0.96%
Open	18.65
Previous Close	18.81
Market Cap ( Millions)	17750
Volume	20327169
Year High	31.43
Year Low	17.56
M A 50	20.64
M A 200	24.87

FCF Yield	16.21%
Dividend Yield	6.15%
ROE	1135.29%
Debt / Equity	284.68%
Net Debt / EBIDTA	160.81%
Price To Book	5.16
Price Earnings Ratio	7.01
Price To FCF	6.17
Price To sales	0.32
EV / EBITDA	5.97

2. HP Inc. Delivers Strong Q1 2026 Earnings, Driven by PC Demand and AI Adoption

HP Inc.'s revenue for the first quarter of 2026 was $14.4 billion, up 7% year-over-year, driven by performance in Personal Systems, with PC demand in the Windows 11 refresh cycle and AI PCs contributing to the growth. Non-GAAP EPS was $0.81, up 9% year-over-year, at the top of the guidance range, beating analyst estimates of $0.77. The company's gross margin was 19.6%, with non-GAAP operating expenses down year-over-year.

Publication Date: Feb -26

                                    📋 Highlights
                                    Revenue Growth::
                                                Q1 revenue reached $14.4 billion, a 7% year-over-year increase, driven by a 11% rise in Personal Systems revenue (12% unit growth) due to Windows 11 refresh and AI PC adoption.
Non-GAAP EPS Performance::
                                                Non-GAAP EPS hit $0.81, up 9% YoY, hitting the top of guidance, supported by disciplined operating expenses and cash flow generation ($200 million free cash flow).
AI PC Momentum::
                                                AI PCs accounted for 35% of PC shipments, with the HP EliteBoard G1a launching as the first AI-integrated keyboard PC, reflecting strategic innovation in the workplace.
Memory Cost Mitigation::
                                                Secured long-term agreements and new suppliers to address 100% sequential memory price hikes, with 35% of PC bill of materials now memory, driving cost management priorities.
Free Cash Flow & Shareholder Returns::
                                                Returned $600 million to shareholders in Q1, with $400 million in operating cash flow, targeting $2.8–$3 billion in annual free cash flow despite back-half-loaded performance.

                                

Segment Performance

Personal Systems revenue was up 11%, with 12% unit growth, driven by Win 11 refresh, AI PC adoption, and strong Consumer performance. Print revenue was down 2%, with Consumer revenue down 8% and Commercial revenue down 3%. The company gained share in supplies while increasing pricing to partially offset installed base and usage headwinds.

Guidance and Outlook

The company expects revenue growth in fiscal year '26, driven by pricing actions, share gains in premium categories, and increased attach of higher-margin offerings in Personal Systems. In Print, the company expects the hardware market to decline low single digits in calendar '26, but anticipates growth in Big Tanks and industrial print to offset this decline. HP is maintaining its annual non-GAAP diluted earnings per share guidance range of $2.90 to $3.20 and expects to be closer to the lower end of this range.

Memory Cost Increases and Mitigation Strategies

Memory cost increases are expected to be significant, with current prices up about 100% sequentially, and further increases anticipated in the latter part of the year. The company is working to mitigate these headwinds through product cost actions, company-wide cost actions, and price increases. HP has secured long-term agreements with memory suppliers, which protect its supply coverage.

Valuation and Dividend Yield

With a P/E Ratio of 6.72 and a Dividend Yield of 6.42%, HP Inc.'s stock appears to be reasonably valued. The company's ROIC is 23.29%, indicating efficient capital allocation. The Net Debt / EBITDA ratio is 1.61, suggesting a manageable debt burden. Analysts estimate next year's revenue growth at 1.1%, which is relatively modest.

3. NewsRoom

HP Inc. $HPQ Shares Sold by Clifford Swan Investment Counsel LLC

09:44

Source: defenseworld.net

HP Inc. (NYSE:HPQ) Given Consensus Recommendation of “Reduce” by Brokerages

08:18

Source: defenseworld.net

HP Q1 Earnings: Mr. Market's Short-Term Focus Presents Us An Opportunity

Feb -26

Source: seekingalpha.com

HP's Margin Squeeze Deepens As Memory Costs Surge

Feb -25

Source: benzinga.com

Stock Market Today: Stocks Surge Ahead of Nvidia Results; Tech Shares Help Major Indexes Rebound Further After Tumbling Monday

Feb -25

Source: investopedia.com

HPQ Stock Stagnates Despite Strong Q1 Results Amid Rising Memory Costs

Feb -25

Source: gurufocus.com

HP issues cautious guidance after fiscal Q1 results top estimates

Feb -25

Source: proactiveinvestors.com

CRCL, CAVA Churn Higher as HPQ Drops on Guidance

Feb -25

Source: youtube.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.27%)

6. Segments

Personal Systems

Expected Growth: 2.5%

The 2.5% growth in HP Inc.'s Personal Systems segment is driven by increased demand for premium laptops, desktops, and workstations. Strong sales of gaming PCs, fueled by the rise of esports, and growth in commercial PCs due to enterprise refresh cycles, contribute to this modest growth. Additionally, HP's innovation in convertible and 2-in-1 devices supports the segment's expansion.

Printing

Expected Growth: 1.8%

HP Inc.'s printing segment growth of 1.8 is driven by increasing demand for 3D printing, strong performance in commercial and industrial printing, and a recovering global economy. Additionally, HP's innovative product offerings and expanding services portfolio contribute to its growth momentum.

Corporate Investments

Expected Growth: 3.2%

HP Inc.'s corporate investments growth of 3.2% is driven by strategic acquisitions, increased demand for enterprise hardware and software, and a focus on emerging technologies like cloud computing, cybersecurity, and data analytics. This growth is also attributed to management's efforts to improve operational efficiency and expand into new markets.

Other

Expected Growth: 1.2%

HP Inc.'s growth is driven by strong demand for PCs, printers, and gaming products. The company's focus on innovation, particularly in 3D printing and HP Z workstation, contributes to its growth. Additionally, HP's strategic acquisitions and partnerships, such as its deal with Microsoft, enhance its offerings and expand its customer base, fueling growth.

7. Detailed Products

HP Envy Laptops

A line of consumer laptops known for their sleek designs, vibrant displays, and robust performance for everyday tasks and entertainment.

HP Pavilion Gaming Laptops

A series of gaming laptops offering powerful processors, high-end graphics cards, and customizable features for an immersive gaming experience.

HP Spectre Ultrabooks

An elite line of ultra-portable laptops focused on thin and light designs, long battery life, and premium features.

HP EliteBook Business Laptops

A range of business laptops built for enterprise use, offering security, manageability, and durability for professional environments.

HP ProBook Business Laptops

Business-focused laptops providing a balance of performance, security, and value, designed for small to medium-sized businesses.

HP DeskJet Printers

A line of affordable inkjet printers for home and small office use, offering easy printing, scanning, and copying capabilities.

HP LaserJet Printers

A series of laser printers known for their high-speed, high-volume printing, and durability, suitable for demanding office environments.

HP OfficeJet Printers

Multifunction printers combining printing, scanning, and faxing in one device, aimed at small businesses and home offices.

HP Z-Series Workstations

High-performance workstations engineered for professional use in video editing, 3D rendering, engineering, and other compute-intensive tasks.

HP Monitors

A wide range of monitors from basic models for everyday use to high-end displays with advanced features like 4K resolution and curved screens.

8. HP Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

HP Inc. operates in a highly competitive market with various substitutes available for its products. However, HP's strong brand reputation and diversified product portfolio mitigate the threat. The increasing demand for digital solutions and cloud-based services could potentially increase the threat of substitutes, but HP's efforts to innovate and adapt to changing market trends help to neutralize this threat.

Bargaining Power Of Customers

HP Inc.'s customers have a significant bargaining power due to the availability of various alternatives in the market. The customers can easily switch to competitors' products, which puts pressure on HP to maintain competitive pricing and provide high-quality products. Additionally, the increasing demand for customized solutions and services gives customers more negotiating power.

Bargaining Power Of Suppliers

HP Inc. has a large and diversified supplier base, which reduces the bargaining power of individual suppliers. The company has a strong procurement strategy and long-term relationships with its suppliers, which enables it to negotiate favorable terms and prices. Additionally, the availability of alternative suppliers further decreases the bargaining power of HP's suppliers.

Threat Of New Entrants

The threat of new entrants in HP Inc.'s market is relatively low due to high barriers to entry, such as significant investments required in research and development, marketing, and distribution. Additionally, HP's strong brand reputation and established customer relationships make it challenging for new entrants to gain traction in the market.

Intensity Of Rivalry

The technology industry is highly competitive, and HP Inc. faces intense rivalry from established players such as Dell, Lenovo, and Apple. The competition is driven by factors such as pricing, product features, and innovation, which puts pressure on HP to continuously invest in R&D and marketing to maintain its market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	113.82%
Debt Cost	6.58%
Equity Weight	-13.82%
Equity Cost	10.73%
WACC	6.01%
Leverage	-823.81%

11. Quality Control: HP Inc. passed 3 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

A-Score: 5.6/10

Value: 9.0

Growth: 4.1

Quality: 4.8

Yield: 8.0

Momentum: 1.5

Volatility: 6.3

1-Year Total Return ->

NetApp

A-Score: 5.5/10

Value: 3.4

Growth: 5.7

Quality: 7.4

Yield: 5.0

Momentum: 4.5

Volatility: 7.0

1-Year Total Return ->

Arista Networks

A-Score: 5.0/10

Value: 0.6

Growth: 9.4

Quality: 8.3

Yield: 0.0

Momentum: 8.0

Volatility: 3.7

1-Year Total Return ->

Dell Technologies

A-Score: 4.6/10

Value: 6.6

Growth: 4.0

Quality: 4.6

Yield: 4.0

Momentum: 5.0

Volatility: 3.7

1-Year Total Return ->

Western Digital

A-Score: 4.3/10

Value: 1.8

Growth: 3.4

Quality: 7.3

Yield: 0.0

Momentum: 10.0

Volatility: 3.3

1-Year Total Return ->

Super Micro Computer

A-Score: 3.9/10

Value: 3.6

Growth: 9.8

Quality: 5.0

Yield: 0.0

Momentum: 3.5

Volatility: 1.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-7.83%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

6.01%

HP Inc. - US40434L1052

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on HPQ

1.c. Company Highlights

Higher Yield

Less Volatile

Cheaper

Revenues Miss

Earnings Beats

Revenues Beats

Earnings Miss

Medium Volatility

Average Quality

Fairly Valued

Average Growth

Stable Momentum

Lower Quality

Weak Momentum

2. HP Inc. Delivers Strong Q1 2026 Earnings, Driven by PC Demand and AI Adoption

Segment Performance

Guidance and Outlook

Memory Cost Increases and Mitigation Strategies

Valuation and Dividend Yield

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.27%)

6. Segments

Personal Systems

Expected Growth: 2.5%

Printing

Expected Growth: 1.8%

Corporate Investments

Expected Growth: 3.2%

Other

Expected Growth: 1.2%

7. Detailed Products

HP Envy Laptops

HP Pavilion Gaming Laptops

HP Spectre Ultrabooks

HP EliteBook Business Laptops

HP ProBook Business Laptops

HP DeskJet Printers

HP LaserJet Printers

HP OfficeJet Printers

HP Z-Series Workstations

HP Monitors

8. HP Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: HP Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

18.99$

12.e Scoring ^Insights

12.f DCF ^BETA