Are Investors Undervaluing HP (HPQ) Right Now?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Neverthe...
The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One stock to keep an eye on is HP (HPQ). HPQ is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.
Investors will also notice that HPQ has a PEG ratio of 0.97. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. HPQ's industry currently sports an average PEG of 2.01. Over the last 12 months, HPQ's PEG has been as high as 5.84 and as low as 0.92, with a median of 1.63.
Finally, we should also recognize that HPQ has a P/CF ratio of 8.04. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. HPQ's P/CF compares to its industry's average P/CF of 27.26. Over the past 52 weeks, HPQ's P/CF has been as high as 11.14 and as low as 6.82, with a median of 8.40.
Value investors will likely look at more than just these metrics, but the above data helps show that HP is likely undervalued currently. And when considering the strength of its earnings outlook, HPQ sticks out at as one of the market's strongest value stocks.
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