• Investors may be wondering whether HP's current share price reflects its true worth, or if the recent weakness is setting up an opportunity.
• HP shares closed at US$18.22, with returns of a 1.3% decline over 7 days, 5.4% decline over 30 days, 17.6% decline year to date, 33.4% decline over 1 year, 26.3% decline over 3 years and 25.8% decline over 5 years. This performance may have changed how the market views its risk and reward profile.
• Recent headlines around HP have largely focused on how the company is positioned within the wider tech sector and how its traditional PC and printing businesses compare with more growth focused peers. This context helps explain why some investors are reassessing what they are willing to pay for HP's earnings and cash flows.
• HP currently has a valuation score of 5 out of 6, suggesting the stock screens as undervalued on most of Simply Wall St's checks. The rest of this article will walk through those methods, and will finish with a way to think about value that goes beyond the usual ratios and models.

Approach 1: HP Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a company might be worth today by projecting its future cash flows and then discounting those back to a present value. It is essentially asking what HP’s future cash generation is worth in today’s dollars.

HP’s latest twelve month free cash flow is about $2.97b. Using a 2 Stage Free Cash Flow to Equity model, analysts and Simply Wall St estimates project free cash flow between 2026 and 2035, with a projected figure of $3.08b in 2030. Analyst inputs are used for the earlier years and later years are extrapolated by Simply Wall St based on those trends.

When those projected cash flows are discounted back, the model arrives at an estimated intrinsic value of US$42.35 per share. Compared with the recent share price of US$18.22, the DCF output suggests HP trades at roughly a 57.0% discount, which screens as materially undervalued on this model alone.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests HP is undervalued by 57.0%. Track this in your watchlist or portfolio, or discover 49 more high quality undervalued stocks.

Approach 2: HP Price vs Earnings

For a profitable company like HP, the P/E ratio is a useful way to think about what you are paying for each dollar of current earnings. It ties the share price directly to the earnings that equity holders receive today.

What counts as a “normal” P/E often reflects how the market views a company’s growth potential and risk profile. Higher expected growth or lower perceived risk can support a higher multiple, while slower expected growth or higher risk tends to justify a lower one.

HP currently trades on a P/E of 6.64x. This is well below the Tech industry average P/E of about 23.06x and also below the peer average of 49.13x that investors are paying for similar stocks. On simple comparisons, HP screens as cheap relative to both its sector and peers.

Simply Wall St’s Fair Ratio of 22.59x is a proprietary estimate of what HP’s P/E might be given its earnings growth profile, profit margins, industry, market cap and specific risks. This makes it more tailored than a basic peer or industry comparison, which can overlook differences in business quality and risk.

Comparing HP’s actual P/E of 6.64x with the Fair Ratio of 22.59x suggests the shares trade well below this modelled “fair” level.

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, so this is where Narratives come in, letting you attach a clear story about HP to the numbers you see, such as your fair value, revenue, earnings and margin assumptions.

A Narrative is simply your view of how HP's business plays out, written as a short story that is then tied directly to a forecast and a resulting fair value, so you are not just looking at ratios in isolation.

On Simply Wall St's Community page, millions of investors use Narratives as an easy tool to compare their own HP story with others. They can then see how each story translates into a fair value that can be stacked against the current share price to help decide whether to buy, hold or sell.

Because Narratives are linked to data on the platform, they update automatically when fresh information arrives, such as new AI PC products, news about memory costs, leadership changes or revised analyst assumptions on HP's revenue, earnings or fair value.

For HP, one Narrative on the platform currently ties to a fair value of about US$18.00, while another sits at about US$38.00. This shows how two investors can look at the same company, plug in very different expectations and end up with very different views of what the stock is worth today.

For HP, here are previews of two leading HP Narratives to make comparison easier:

Fair value: US$19.99 per share

Implied discount to this narrative: about 8.9% below fair value at the last close

Revenue growth assumption: 74.8%

• Backs AI driven PCs, premium devices and digital services as key supports for revenue, margins and more stable earnings.
• Emphasizes cost reductions, supply chain diversification and sustainability as supports for profitability and competitive position.
• Flags structural print and PC headwinds, pricing pressure and digital substitution as the main risks to this more optimistic view.

Fair value: US$18.00 per share

Implied premium to this narrative: about 1.2% above fair value at the last close

Revenue growth assumption: 11.8%

• Builds in weaker revenue expectations, even as earnings and margins are assumed to edge higher over time.
• Highlights pressure from memory costs, tariffs, weak consumer demand and tough competition as key risks to earnings power.
• Treats leadership change and supply chain adjustments as added uncertainties that could cap how much value investors are willing to place on HP's shares.

If you want to see how your own view of HP compares with these stories, you can use the full set of narratives on Simply Wall St as a reference point instead of relying on a single fair value number.

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.