Is HPQ Share Weakness Creating A Potential Opportunity After Recent Tech Sector Reassessment?

• If you are wondering whether HP's current share price reflects its underlying value, this article will walk you through what the numbers are really saying.
• HP shares, which last closed at US$18.35, have seen returns of 7.1% decline over 7 days, 9.9% decline over 30 days, and 17.0% decline year to date, contributing to a 44.7% decline over 1 year and 29.4% decline over 3 years, with a 22.2% decline over 5 years.
• Recent news coverage has focused on HP's position in the broader tech sector and how its traditional PC and printing businesses fit into current market trends. This context helps explain why some investors are reassessing the balance between potential recovery and the risks implied by the share price moves.
• On our valuation framework, HP scores 5 out of 6, meaning it appears undervalued on five separate checks. You can see that breakdown in detail through our valuation score. Next, we will look at the different valuation approaches behind that result, and finish by pointing you to an even more comprehensive way to assess HP's value.

Find out why HP's -44.7% return over the last year is lagging behind its peers.

Approach 1: HP Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow, or DCF, model estimates what a business might be worth today by projecting its future cash flows and then discounting them back to a present value. For HP, the model used is a 2 Stage Free Cash Flow to Equity approach, which focuses on the cash that could in theory be available to shareholders.

HP’s latest twelve month free cash flow is about $2.99b. Based on analyst inputs and Simply Wall St extrapolations, projected free cash flow runs through to 2035, with an estimate of $3.08b in 2030. These future cash flows are discounted back using the model’s assumptions, producing an estimated intrinsic value of US$44.34 per share.

Comparing this to the recent share price of US$18.35, the output of the model implies HP trades at a 58.6% discount to the DCF estimate, which points to the shares looking materially undervalued on this model alone.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests HP is undervalued by 58.6%. Track this in your watchlist or portfolio, or discover 53 more high quality undervalued stocks.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for HP.

Approach 2: HP Price vs Earnings

For a profitable business, the P/E ratio is a useful way to think about value because it links what you pay per share to the earnings that the company is already generating. In general, higher expected growth and lower perceived risk can support a higher “normal” P/E, while lower growth or higher risk usually justifies a lower multiple.

HP currently trades on a P/E of 6.66x. That sits well below the broader Tech industry average P/E of 21.90x and the peer group average of 59.04x. On the surface, this gap suggests the market is applying a sizeable discount to HP compared to many other tech names.

Simply Wall St’s Fair Ratio for HP is 23.44x. This is its estimate of what a more suitable P/E might be after considering factors such as earnings growth, profit margins, industry, market cap and specific risks. This Fair Ratio can be more informative than a straight comparison with industry or peer averages because it is tailored to HP’s own profile rather than a broad group. Since HP’s current P/E of 6.66x is well below the Fair Ratio of 23.44x, the shares screen as undervalued on this metric.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your HP Narrative

Earlier we mentioned that there is an even better way to think about valuation, so let us introduce you to Narratives, which let you connect your view of HP’s story to a set of forecasts and a fair value in a clear, structured way.

A Narrative is simply you writing the story behind the numbers, where your assumptions for HP’s future revenue, earnings, margins and fair value are made explicit instead of being hidden in a headline price target.

On Simply Wall St’s Community page, Narratives are an easy tool used by millions of investors that link three pieces together: the company story you believe, the financial forecast that follows from that story, and the fair value that falls out of those numbers.

Once you have a Narrative, you can quickly compare its Fair Value to HP’s current share price to help you decide whether the stock looks more attractive, less attractive or somewhere in between based on your own assumptions.

These Narratives update automatically when new information arrives, such as earnings, news about AI PCs, cost restructuring plans or analyst target changes. This helps your fair value view stay aligned with the latest data without you rebuilding models from scratch.

For HP today, one investor on the bearish side might anchor on a fair value near US$18.00, while a more optimistic investor might lean toward US$38.00. Narratives on the platform help each of them see exactly which revenue, margin and P/E assumptions lead to those very different conclusions.

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

🐂 HP Bull Case

Fair value in this bullish narrative: US$25.01 per share

Implied discount to that fair value vs the last close of US$18.35: about 27% undervalued

Annual revenue growth assumption: 1.18%

• AI driven PCs, premium devices and digital services are expected to support revenue, margins and a larger share of recurring, higher margin income.
• Ongoing cost reduction, supply chain diversification and sustainability efforts are expected to support earnings resilience and HP's competitive position.
• Structural pressure on print and traditional PC markets, intense price competition and shifts to mobile and cloud services are key risks that could cap growth and margins.

🐻 HP Bear Case

Fair value in this bearish narrative: US$18.00 per share

Implied premium to that fair value vs the last close of US$18.35: about 2% overvalued

Annual revenue growth assumption: 11.83%

• AI PCs and new software features, along with acquired AI assets, are treated cautiously, with concern that they may not lift revenue and earnings as much as hoped.
• Tariffs, higher memory costs and supply chain shifts are expected to weigh on margins if savings and diversification do not offset these pressures.
• Weak consumer demand, competitive pricing in PCs and print and geopolitical risks are central to this view and feed into a lower fair value and P/E multiple.

If you want to go beyond these quick snapshots and test which story fits your own expectations for HP, you can read each Narrative in full and see how the assumptions feed directly into fair value, future earnings and risk. Curious how numbers become stories that shape markets? Explore Community Narratives

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.

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