HPQ
HP Inc.
$23.71
Stable Earnings Power
40%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Undervalued
Trading 29.8% below fair value
You pay
$23.71
Bear
$27.04
Fair
$33.80
Bull
$40.56
Bear
$27.04
+14.0%
$2.75 × 12x P/E
Fair
$33.80
+42.5%
$2.75 × 15x P/E
Bull
$40.56
+71.0%
$2.75 × 18x P/E
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
8.6x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $19.83 from 52 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $33.80 per share.
Warnings
Dividend-based valuation: $29.04 (below our primary estimate by 30%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $19.83 (from 52 analysts). Our estimate is 108% above the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples