Why HP Stock Is Back in Focus Ahead of Earnings

HP (HPQ) is back under the spotlight as investors brace for an upcoming earnings report that is expected to show weaker EPS alongside revenue growth, while questions around the stock’s valuation continue to build.

At a share price of $27.27, HP has seen strong recent momentum, with a 30 day share price return of 23.84% and a 90 day share price return of 30.92%. However, the 3 year total shareholder return remains slightly negative, which keeps questions about how current enthusiasm aligns with longer term performance and valuation firmly in play.

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After a 31% move in three months and an upcoming earnings report that could pressure expectations, the real issue for HP now is simple: Does the current price still offer enough upside to justify the risks?

Most Popular Narrative: 19% Overvalued

Compared with HP's last close at $27.27, the most followed narrative fair value of $22.91 points to a meaningful gap that centers the upcoming earnings call on how realistic those long term assumptions look.

Persistent structural cost reduction initiatives, including manufacturing diversification outside China, AI enabled automation, and a $2B annualized savings target, are set to drive sustainable improvements in net margins and bottom line earnings resilience.

HP's focus on responsible innovation and sustainability, exemplified by significant recycled content in devices and advances toward net zero, aligns with growing enterprise and consumer preference for eco friendly technology and may influence its competitive positioning over the long term.

The fair value hinges on modestly higher margins, steady earnings and a richer future earnings multiple. Curious which specific revenue paths and share count assumptions make those numbers stack up.

Result: Fair Value of $22.91 (OVERVALUED)

However, HP still faces pressure from structurally weaker print demand and intense PC price competition, which could challenge the margin and earnings assumptions behind that fair value.

Another View on HP Valuation

While the most popular HP narrative flags the stock as about 19% overvalued against a $22.91 anchor, the current P/E of 9.8x tells a different story. It sits well below the global tech peer average of 21.9x and a fair ratio of 26.4x, which points to a wide gap in how the market is currently pricing its earnings power. That gap could signal either a cushion against disappointment or a warning that the market expects more pressure than analysts are modeling.

For a closer look at how that earnings multiple stacks up across peers and the fair ratio, See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

Given the mixed signals around HP and its valuation, it makes sense to move quickly and check the facts for yourself. To weigh both the concerns and the potential upside, start with 3 key rewards and 3 important warning signs

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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.