- Some investors are considering whether HP's current share price reflects its underlying value, or if the market is mispricing a familiar tech name.
- HP's stock recently closed at US$18.94, with a 0.6% decline over 7 days, a 2.7% decline over 30 days and a 14.4% decline year to date, contributing to a 14.9% decline over the past year and deeper falls over the past 3 and 5 years.
- Recent headlines around HP have focused on how a mature PC and printer business fits into a tech sector where attention is often on faster growing areas. This context helps explain why some investors are reassessing both the potential upside and the risks around the current share price.
- HP currently has a valuation score of 5 out of 6, which means most of Simply Wall St's value checks point to the stock being priced below their estimate of fair value. The rest of this article will unpack how that score is reached using several valuation methods, and then outline a more complete way to think about value beyond any single metric.
Find out why HP's -14.9% return over the last year is lagging behind its peers.
Approach 1: HP Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model projects a company’s future cash flows and then discounts them back to today to estimate what the business might be worth right now.
For HP, Simply Wall St uses a 2 Stage Free Cash Flow to Equity model based on cash flow projections. The latest twelve month Free Cash Flow is about $2.97b. Analyst estimates and extrapolated figures suggest annual Free Cash Flow in the $2.8b to $3.3b range over the coming decade, with a specific projection of $3.08b in 2030. All of these figures are measured in US$.
When these projected cash flows are discounted back to today, Simply Wall St arrives at an estimated intrinsic value of US$43.04 per share. Compared with the recent share price of US$18.94, this implies an intrinsic discount of about 56.0%. This suggests that HP is trading well below this particular cash flow based estimate of fair value.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests HP is undervalued by 56.0%. Track this in your watchlist or portfolio, or discover 62 more high quality undervalued stocks.
Approach 2: HP Price vs Earnings
For a profitable company like HP, the P/E ratio is a useful way to relate what you pay per share to the earnings that each share generates. Investors usually expect higher P/E ratios when they see stronger growth potential and lower perceived risk, and lower P/E ratios when growth expectations are modest or risks feel higher.
HP currently trades on a P/E of 6.9x. That sits well below the Tech industry average P/E of about 21.5x, and also below the broader peer group average of 47.6x. On the surface, this signals that the market is assigning a lower earnings multiple to HP than to many other tech names.
Simply Wall St also applies a proprietary “Fair Ratio” framework, which estimates what a more tailored P/E might be given HP’s earnings profile, industry, profit margins, market cap and company specific risks. Because it is calibrated to the company’s own fundamentals rather than just broad group averages, this Fair Ratio can give a more focused read on valuation. For HP, the Fair Ratio is 20.4x, which is well above the current 6.9x P/E. This difference indicates that the shares are priced below this earnings based estimate of fair value.
Result: UNDERVALUED
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Upgrade Your Decision Making: Choose your HP Narrative
Earlier it was mentioned that there is an even better way to understand valuation. Narratives on Simply Wall St let you attach a clear story about HP to the numbers by tying your view on its future revenue, earnings and margins to a forecast and a fair value, then continuously updating that view when new information like news or earnings arrives.
Within the Community page, Narratives are available as an easy tool used by millions of investors. You can see how some investors build a more optimistic HP story around AI PCs, cost savings and a Fair Value of about US$25.18, while others take a more cautious view closer to US$18.00. You can then compare each Fair Value to the current share price to help decide whether HP looks more like a buy, sell or hold to you based on your own assumptions.
For HP however we'll make it really easy for you with previews of two leading HP Narratives:
These give you two clear frameworks to test against your own expectations on AI PCs, memory costs, margins and what a reasonable fair value might look like at today's share price of US$18.94.
Fair value in this bullish narrative: US$25.18
Implied discount to this fair value versus the last close: about 25.0% undervalued based on the narrative assumptions.
Revenue growth assumption in this narrative: 2.31% a year.
- Assumes HP benefits from AI PCs, CosmOS integration from the Humane acquisition and a focus on the Future of Work, with these moves feeding through to higher revenue and margins over time.
- Builds in meaningful cost savings and manufacturing diversification away from China, with a view that this supports earnings resilience even as input costs and tariffs remain a factor.
- Requires you to be comfortable that by 2029 HP can reach about US$60.2b of revenue, around US$3.2b of earnings and trade on a P/E of 8.8x, with buybacks reducing the share count each year.
Fair value in this more cautious narrative: US$18.00
Implied premium to this fair value versus the last close: about 5.0% overvalued based on the narrative assumptions.
Revenue growth assumption in this narrative: 0.12% a year.
- Highlights pressure from memory costs, tariffs, weak consumer demand and tough pricing in China, with concerns that these factors could limit how much HP can expand earnings.
- Sees AI PCs and the Humane assets as helpful but not guaranteed to lift growth meaningfully if product differentiation or execution falls short of expectations.
- Builds in slower revenue trends through 2028, modest margin improvement and a lower future P/E multiple, leading to an internal fair value of about US$18.00 that sits close to the current share price.
Putting these together, you can think of the bullish US$25.18 narrative and the cautious US$18.00 narrative as two reference points for your own view on HP's earnings power, AI and PC demand, cost structure and acceptable P/E range. If your assumptions are closer to the bullish camp, the recent price might look more attractive relative to your fair value. If you lean toward the cautious case, the current price may already bake in much of what you expect from HP's outlook.
To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for HP on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.
Do you think there's more to the story for HP? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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