HEWLETT-PACKARD NYSE-HPQ
TIMELINESS
SAFETY
TECHNICAL
–
3
–
High:
Low:
Suspended 10/2/15
Lowered 7/6/12
Suspended 10/2/15
BETA 1.15 (1.00 = Market)
26.3
16.1
30.3
18.9
RECENT
PRICE
41.7
28.3
53.5
38.2
10.5 RELATIVE
DIV’D
Median: 13.0) P/E RATIO 0.82 YLD 2.7%
25.65 P/ERATIO 14.1(Trailing:
51.0
28.2
52.9
25.4
54.8
37.3
49.4
21.5
30.0
11.4
28.7
14.7
40.9
27.3
41.1
24.9
VALUE
LINE
Target Price Range
2018 2019 2020
LEGENDS
7.0 x ″Cash Flow″ p sh
. . . . Relative Price Strength
Options: Yes
Shaded area indicates recession
80
60
50
40
30
25
20
15
2018-20 PROJECTIONS
Ann’l Total
Price
Gain
Return
High
45 (+75%) 17%
Low
30 (+15%)
7%
Insider Decisions
to Buy
Options
to Sell
N D
0 0
3 14
2 11
J
0
7
5
F
0
1
1
M
0
1
1
A
0
0
0
M
0
3
4
J
0
2
3
J
0
1
1
% TOT. RETURN 8/15
Institutional Decisions
4Q2014
1Q2015
2Q2015
430
425
386
to Buy
to Sell
491
508
462
Hld’s(mill.)141973814158541398829
Percent
shares
traded
30
20
10
1 yr.
3 yr.
5 yr.
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
21.09 25.05 23.32 23.77 24.01 27.45 30.56 33.55 40.42 49.01 48.44 57.18 63.91 61.31
2.21
2.53
1.60
1.49
2.00
2.22
2.49
2.97
3.86
4.84
5.26
6.16
6.06 d3.85
1.50
1.73
.89
.79
1.16
1.33
1.62
2.03
2.68
3.25
3.14
3.69
3.32 d6.41
.32
.32
.32
.32
.32
.32
.32
.32
.32
.32
.32
.32
.40
.50
.56
.89
.79
.56
.66
.73
.70
.93
1.18
1.24
1.56
1.88
2.28
1.89
9.11
7.30
7.20 11.91 12.40 12.90 13.10 13.96 14.93 16.13 17.13 18.50 19.59 11.63
2009.1 1947.3 1939.0 3044.0 3043.0 2911.0 2837.0 2732.0 2580.0 2415.0 2365.0 2204.0 1991.0 1963.0
27.7
33.3
31.7
22.4
16.3
15.9
14.1
16.2
16.5
14.2
12.0
12.9
11.3
-1.58
2.16
1.62
1.22
.93
.84
.75
.87
.88
.85
.80
.82
.71
-.8%
.6%
1.1%
1.8%
1.7%
1.5%
1.4%
1.0%
.7%
.7%
.8%
.7%
1.1%
2.2%
CAPITAL STRUCTURE as of 7/31/15
Total Debt $25502 mill. Due in 5 Yrs $12222 mill.
LT Debt $14468 mill. LT Interest $512.0 mill.
(LT int. earned: 11.0x; tot’l int. coverage; 8.3x)
(35% of Cap’l)
Pension Assets-10/14 $29.5 bill. Oblig. $34.9 bill
Pfd Stock None
Common Stock 1,798,224,792 shs.
as of 8/31/15
MARKET CAP: $46 billion (Large Cap)
CURRENT POSITION 2013
2014
($MILL.)
Cash Assets
12163 15133
Receivables
15876 13832
Inventory (FIFO)
6046
6415
Other
16279 14765
Current Assets
50364 50145
Accts Payable
14019 15903
Debt Due
5979
3486
Other
25523 24346
Current Liab.
45521 43735
7/31/15
86696 91658 104286 118364
9.1%
9.7% 12.0% 13.1%
2344.0 2353.0 2705.0 3356.0
4708.0 5761.0 7264.0 8329.0
16.9% 19.9% 20.8% 20.5%
5.4%
6.3%
7.0%
7.0%
11874 12414 8142.0 d1211
3392.0 2490.0 4997.0 7676.0
37176 38144 38526 38942
11.8% 14.3% 17.1% 18.2%
12.7% 15.1% 18.9% 21.4%
10.2% 12.8% 16.7% 19.3%
20%
16%
12%
10%
114552
15.4%
4773.0
7660.0
18.6%
6.7%
9536.0
13980
40517
14.5%
18.9%
17.0%
10%
58.86 60.61 58.10 56.75
5.10
5.08
4.25
4.85
2.62
2.62
1.90
2.50
.55
.61
.69
.70
1.68
2.10
1.90
1.90
14.29 14.54 14.95 16.70
1908.0 1839.0 1790.0 1780.0
7.9
12.2 Bold figures are
Value Line
.44
.64
estimates
2.7%
1.9%
THIS
STOCK
VL ARITH.*
INDEX
-24.8
78.1
-19.4
-3.7
49.7
98.6
© VALUE LINE PUB. LLC
10
7.5
18-20
Sales per sh A
63.75
‘‘Cash Flow’’ per sh
5.60
AB
Earnings per sh
2.90
Div’ds Decl’d per sh CF■
.90
Cap’l Spending per sh
2.00
Book Value per sh E
22.05
Common Shs Outst’g D 1725.0
Avg Ann’l P/E Ratio
13.0
Relative P/E Ratio
.80
Avg Ann’l Div’d Yield
2.4%
126033 127245 120357 112298 111454 104000 101000 Sales ($mill) A
15.5% 14.4%
NMF 12.9% 10.3%
9.0% 10.0% Operating Margin
4820.0 4984.0 5095.0 4611.0 4334.0
4100
4100 Depreciation ($mill)
8761.0 7074.0 d12650 5113.0 5013.0
3500
4500 Net Profit ($mill)
20.2% 21.2%
- - 21.5% 23.5% 22.0% 22.0% Income Tax Rate
7.0%
5.6%
NMF
4.6%
4.5%
2.4%
4.5% Net Profit Margin
4781.0 579.0 3971.0 4843.0 6410.0
2900
3800 Working Cap’l ($mill)
15258 22551 21789 16608 16039 14000 15000 Long-Term Debt ($mill)
40781 39004 22833 27269 26731 26725 29700 Shr. Equity ($mill)
16.1% 11.9%
NMF 12.2% 12.3%
9.0% 10.5% Return on Total Cap’l
21.5% 18.1%
NMF 18.8% 18.8% 13.0% 15.0% Return on Shr. Equity
19.6% 16.0%
NMF 14.7% 14.3%
8.5% 11.0% Retained to Com Eq
9%
12%
NMF
22%
24%
36%
28% All Div’ds to Net Prof
110000
11.0%
4600
5100
22.0%
4.6%
5000
25000
38000
9.0%
13.5%
9.5%
31%
BUSINESS: Hewlett-Packard Company provides computing and
imaging solutions, services and software to consumers and
businesses. Revenue as a % of total (of pretax earnings) in ’14:
Printing & Personal Systems, 50% (48%); Enterprise Servers,
Storage, & Networking, 24% (35%); Enterprise Services, 19%
(7%); Software, 3% (8%); Financing & Other, 3% (2%). R & D:
3.1% of ’14 rev.; Foreign sales: 65% of ’14 rev. ’14 depreciation
rate: 16.5%. Acquired Compaq Computer 5/02; EDS, 8/08. About
317,500 employees. Officers & directors own less than 1% of stock;
Dodge & Cox, 9.0%; State Street, 5.1% (2/15 proxy). Chairman &
CEO: Meg Whitman. Inc.: DE. Address: 3000 Hanover St., Palo
Alto, CA 94304. Tel.: 650-857-1501. Internet: www.hp.com.
Hewlett-Packard expects to split into
two publicly traded entities at the end
ANNUAL RATES Past
Past Est’d ’12-’14 of October. HP Inc will include personal
of change (per sh)
10 Yrs.
5 Yrs.
to ’18-’20
computers and printing. Hewlett-Packard
Sales
9.0%
5.5%
1.0%
Enterprise will house enterprise comput‘‘Cash Flow’’
1.0% -14.5% 18.0%
Earnings
--NMF
ing, storage, networking, and enterprise
Dividends
5.5% 11.5%
8.0%
services. H-P shareholders will receive
Book Value
1.0%
-3.5%
8.5%
stock in both companies. The issue’s
Fiscal
Full
QUARTERLY SALES ($ mill.) A
Year
Fiscal Timeliness rank is suspended due to the
Jan.31
Apr.30
Jul.31
Oct.31
Ends
Year pending separation. Our estimates and
2012 30036 30693 29669 29959 120357 projections are for the combined company.
2013 28359 27582 27226 29131 112298 Prospects for Hewlett-Packard Enter2014 28154 27309 27585 28406 111454 prise are mixed. It will begin life with an
2015 26839 25453 25349 26359 104000
2016 25500 24800 24700 26000 101000 annual revenue rate of over $50 billion
and operating profits of nearly $5 billion.
Fiscal
Full
EARNINGS PER SHARE A B
Year
Fiscal Currency pressures will remain a headJan.31
Apr.30
Jul.31
Oct.31
Ends
Year wind in fiscal 2016, but revenues are ex2012
.73
.80 d4.49 d3.49 d6.41 pected to grow on a constant-currency
2013
.63
.55
.71
.73
2.62 basis. Management plans to lower costs by
2014
.74
.66
.52
.70
2.62
2015
.73
.55
.47
.15
1.90 $2.7 billion, mostly by reducing employees
2016
.65
.55
.55
.75
2.50 in the services business (still in a
turnaround mode) by 25,000-30,000, which
C■
QUARTERLY
DIVIDENDS
PAID
CalFull should allow margins to expand, excluding
endar Mar.31 Jun.30 Sep.30 Dec.31 Year
one-time expenses. In all, reported share
2011 .08
.08
.12
.12
.40 net is estimated at $0.75-$0.85 a share in
2012 .12
.12
.132
.132
.50 fiscal 2016, after $1.10 of restructuring,
2013 .132
.132
.1452 .1452
.55 separation, and intangibles costs. Over the
2014 .1452 .1452 .16
.16
.61
next three years, HPE expects its markets
2015 .16
.16
.176
.176
to expand at a 4% annual pace, and looks
for its earnings to advance faster than its
revenues. Investment in promising areas
is a priority, but HPE’s capital plans also
include stock repurchases and dividends.
The shares may appeal to growth-oriented
investors.
HP Inc faces soft demand for personal
systems and intense price competition
from Japanese competitors. With 64%
of its revenues outside the United States,
currency pressures likely will persist. Revenues ($50 billion in the four quarters
ending on July 31st) are expected to
decline moderately in fiscal 2016. After
restructuring and separation costs of only
$0.12 a share, HP Inc anticipates earning
$1.55-$1.65 a share in the new year, about
5% short of its fiscal 2015 expectation. HP
Inc plans to accelerate investment in the
office printing, commercial mobility, and
services arenas, but the long-term outlook
for its markets is cloudy. It intends to return 50%-75% of free cash flow to shareholders in the form of dividends and stock
repurchases. The issue is mostly of interest to patient, income-oriented investors.
Theresa Brophy
October 2, 2015
17171
12753
6700
15374
51998
15549
11034
22450
49033
mill.(E) Incl. intangibles. On 7/31/15, $35.274
(A) Fiscal year ends Oct. 31st. (B) Dil. earnings ’06, 15¢: gains from disc. ops.; ’99, 18¢; ’00,
bill., $19.55 a sh.
p. sh. Quarters may not sum due to change in 7¢. Next earnings report late Nov. (C) Div’ds
shs. Excl. nonrecur. losses: ’99, 1¢; ’01, 68¢;
paid in early January, April, July, and October.
■Div’d reinvestment plan available. (D) In
’02, $1.15; ’03, 33¢; ’04, 18¢; ’05, 80¢: gain,
© 2015 Value Line, Inc. All rights reserved. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind.
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Company’s Financial Strength
Stock’s Price Stability
Price Growth Persistence
Earnings Predictability
A
30
25
5
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