Is HP Inc (HPQ) overvalued?
On Equity Rank's model estimate, HPQ trades 26% below its fair value. HP Inc (HPQ) last closed at $28.46; the multi-method model fair value is $38.48.
| Price | Model fair value | Price vs model |
|---|---|---|
| $28.46 | $38.48 | 26% below |
What the answer rests on
- 5 of 7 valuation methods put HPQ's value above its price and 2 put it below, so the methods disagree.
- To justify today's price, HPQ's free cash flow would need to grow about -1.9% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew -8.6% a year.
- HPQ trades at 11.4 times its last year's earnings, against a median of 26.1 for 34 profitable Hardware companies.
- Over the past year the price sat below the model fair value on 100% of trading days. The gap ranged from 36% below to 16% below the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind HPQ's fair value · What prices assume · Other companies