• If you are wondering whether HP's current share price reflects its real value, you are not alone. This article walks through what the latest data says about where the stock stands today.
• HP shares last closed at US$21.15, with recent returns of 7.2% over 7 days and 8.4% over 30 days, but a 4.4% decline year to date and a 13.3% decline over 1 year. This frames an important question about whether the recent rebound changes the risk and reward trade off.
• Recent news coverage has focused on HP's position in the broader tech sector and how investors are weighing its long term prospects against past share price performance. This context helps explain why the stock has seen short term strength while 3 year and 5 year returns of 21.3% and 24.7% declines still sit in the background for many holders.
• On Simply Wall St's 6 point valuation checklist, HP currently scores 5 out of 6. This sets up a closer look at how different valuation methods stack up and hints at an even deeper way to think about value that will be covered at the end of this article.

Approach 1: HP Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a stock could be worth by projecting the company’s future cash flows and discounting them back to today’s value. It focuses on the cash that could theoretically be returned to shareholders over time.

For HP, the model uses a 2 Stage Free Cash Flow to Equity approach, based on cash flow projections in $. The latest twelve month free cash flow is about $2.97b. Analyst estimates and subsequent extrapolations suggest free cash flow projections through to 2035, with an example projection of $3.08b in 2032 and $3.28b in 2035, discounted back to today at between roughly $1.27b and $2.60b per year in present value terms.

Adding these discounted cash flows together, along with an estimate for value beyond the explicit forecast period, produces an intrinsic value estimate of about $43.22 per share. Compared with the recent share price of US$21.15, this suggests HP may be trading at about a 51.1% discount under this model.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests HP is undervalued by 51.1%. Track this in your watchlist or portfolio, or discover 51 more high quality undervalued stocks.

Approach 2: HP Price vs Earnings

For profitable companies, the P/E ratio is a useful yardstick because it links what you pay for the stock to the earnings the business is already generating. A higher or lower P/E often reflects what the market is building in for future growth and how much risk investors feel they are taking on.

Higher expected earnings growth and lower perceived risk tend to justify a higher “normal” or “fair” P/E, while slower growth or higher risk usually point to a lower multiple. HP currently trades on a P/E of about 7.7x. This is well below the Tech industry average P/E of roughly 24.2x and the peer average of about 48.4x.

Simply Wall St’s Fair Ratio for HP is 23.6x. This is a proprietary estimate of the P/E that might be expected given factors such as HP’s earnings growth profile, industry, profit margins, market cap and risk characteristics. Because it blends these elements, the Fair Ratio can be more tailored than a simple comparison with peers or the broad industry, which may have very different growth, risk and profitability.

Comparing HP’s current P/E of 7.7x with the Fair Ratio of 23.6x suggests the stock screens as undervalued on this metric.

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. Meet Narratives, which let you turn your view of HP into a clear story that links assumptions about future revenue, earnings, margins and a Fair Value to the current share price in a way that is easy to track and compare on Simply Wall St's Community page. Each Narrative updates automatically when new information like earnings or news arrives. Narratives can range from a cautious HP view with a Fair Value of about US$16 based on slightly lower revenue and margin expectations and a 7.4x future P/E, through a central case around US$19.43 with flat to slightly higher margins and an 8.2x future P/E, right up to a more optimistic HP story with a Fair Value near US$25.18 that assumes revenue and margin improvement and an 8.8x future P/E. This gives you a simple way to see how your own HP Narrative compares with the current price and whether the gap between Price and Fair Value looks attractive or stretched to you.

For HP however we will make it really easy for you with previews of two leading HP Narratives:

Fair Value: US$25.18

Implied discount to this Fair Value: about 16.0% based on the current share price of US$21.15

Revenue growth assumption: 2.31% per year

• Frames HP as an AI and advanced compute opportunity, with AI PCs, the Humane CosmOS platform and Future of Work solutions expected to support revenue and margin improvement over time if execution stays on track.
• Emphasises manufacturing diversification away from China and a planned US$1.9b in structural savings by fiscal 2025 as key supports for net margins and earnings resilience.
• Flags pricing pressure, tariffs, higher input costs and the risk that AI PCs and premium products do not gain expected traction as the main threats to this more optimistic Fair Value of US$25.18.

Fair Value: US$16.00

Implied premium to this Fair Value: about 32.0% based on the current share price of US$21.15

Revenue growth assumption: 1.08% annual decline

• Views HP’s AI PC and software efforts as helpful but not guaranteed to stand out, so the revenue and earnings uplift from AI and the Humane acquisition is treated cautiously.
• Assumes tariffs, rising memory and commodity costs, and competitive pricing, particularly in China, could squeeze margins more than bulls expect, while weaker consumer demand weighs on the top line.
• Anchors on a Fair Value of US$16.00 that sits at the low end of analyst targets, with a lower future P/E of about 7.4x to reflect margin risk, supply chain uncertainty and questions around how fully HP can deliver its cost saving plans.

If you want to see how these HP Narratives and risk reward profiles compare side by side with community views and valuation tools, it is worth spending time with the full narrative set and tracking how your own assumptions line up with them, then watching how they change as new data comes through.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.