HPQ
HP Inc.
$31.32
Stable Earnings Power
40%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Fair Value
Trading 21.2% below fair value
You pay
$31.32
Bear
$31.80
Fair
$39.75
Bull
$47.70
Bear
$31.80
+1.5%
$2.65 × 12x P/E
Fair
$39.75
+26.9%
$2.65 × 15x P/E
Bull
$47.70
+52.3%
$2.65 × 18x P/E
Adjust Assumptions
15.0x
2.65$
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
11.8x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (52 analysts)
$25.75
Divergence from AlphaVal
54%
Summary
Applying a 15x P/E to adjusted EPS of $2.65, the base-case value is $39.75 per share. DDM cross-check: $29.04.
Warnings
Dividend-based valuation: $29.04 (below our primary estimate by 27%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $25.75 (from 52 analysts). Our estimate is 54% 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