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HP Inc.
Technology | Computer Hardware
⚡ Executive Summary
📊 The Bottom Line
HP Inc. is a global leader in personal computing and printing, navigating a dynamic market with a strong brand and extensive channel partnerships. While facing memory pricing pressures, its core businesses remain foundational, supported by a significant install base. The company continues to invest in hybrid work solutions and 3D printing for future growth.
⚖️ Risk vs Reward
At US$19.44, HPQ trades significantly below the average analyst target of US$25.01, suggesting potential upside. However, the stock's forward P/E of 6.06 indicates a cautious market outlook, reflecting concerns about industry cyclicality and declining earnings growth. The risk/reward profile is balanced, leaning towards modest upside if market conditions improve for PCs and printing.
🚀 Why HPQ Could Soar
- • Growth in hybrid work solutions and services could expand HP's addressable market beyond traditional hardware sales, boosting recurring revenue streams and profitability.
- • Recovery in the PC market, particularly driven by new AI-enabled PCs, could stimulate demand and drive higher average selling prices, positively impacting HP's Personal Systems segment.
- • Continued expansion in industrial 3D printing and graphic solutions offers a long-term growth vector, diversifying revenue and capitalizing on advanced manufacturing trends.
⚠️ What Could Go Wrong
- • Persistent weakness in the global PC market and declining printing volumes due to digital transformation could continue to pressure HP's core revenue streams.
- • Intense competition from Asian manufacturers and aggressive pricing strategies in both PC and printing segments could erode HP's margins and market share.
- • Supply chain disruptions and memory pricing volatility, as highlighted by Morningstar, could negatively impact HP's cost structure and profitability in the near term.
🏢 Company Overview
💰 How HPQ Makes Money
- • HP Inc. generates revenue primarily through its Personal Systems segment, selling commercial and consumer desktops, notebooks, workstations, and related services globally.
- • The Printing segment contributes significantly by offering consumer and commercial printer hardware, high-margin supplies, and managed print services.
- • HP also develops and sells 3D printing solutions and graphics technologies, targeting commercial and industrial markets for diversification and innovation.
- • The company leverages a vast global network of channel partners for sales and marketing, with a significant customer base outside the United States.
Revenue Breakdown
Personal Systems
69.67%
Sales of PCs, notebooks, workstations, displays, and related services to consumers and commercial clients.
Printing
30.33%
Sales of consumer and commercial printer hardware, high-margin supplies, and print solutions.
🎯 WHY THIS MATTERS
HP's dual focus on personal systems and printing provides a broad revenue base, but also exposes it to the cyclicality and maturity of these markets. The high-margin supplies business within printing is a critical profitability driver, while expansion into services and 3D printing aims to diversify and stabilize future revenue streams.
⭐ Competitive Advantage: What Makes HPQ Special
1. Strong Brand Recognition & Customer Loyalty
HP has a long-standing reputation for reliable and innovative technology, particularly in the commercial PC and printing sectors. This strong brand equity fosters customer loyalty, enabling the company to maintain market share and pricing power despite intense competition. Its global presence and established relationships with enterprise clients provide a significant barrier to entry for new competitors.
2. Extensive Global Distribution & Channel Network
HP boasts an unparalleled global distribution network and deep relationships with channel partners, allowing it to reach a vast and diverse customer base efficiently. This robust infrastructure is crucial for mass market penetration in both mature and emerging markets, providing a cost-effective sales and marketing engine that is difficult and expensive for competitors to replicate.
3. High-Margin Recurring Print Supplies Business
A significant portion of HP's profitability comes from its recurring revenue stream generated by sales of printing supplies (ink and toner). Once a printer is purchased, customers are locked into using compatible supplies, which often carry very high margins. This 'razor-and-blade' model provides stable cash flow and profitability that helps offset the more cyclical nature of hardware sales.
🎯 WHY THIS MATTERS
These competitive advantages—brand strength, global reach, and the recurring revenue from print supplies—collectively create a robust moat for HP. They enable the company to maintain its leadership position, generate consistent cash flows, and mitigate some of the inherent cyclicality and margin pressures within the highly competitive technology hardware markets.
👔 Who's Running The Show
Enrique J. Lores
CEO, President & Director
Enrique J. Lores, 59, serves as CEO, President & Director of HP Inc. With a long tenure at the company, he has been instrumental in HP's transformation since its 2015 split. Lores focuses on driving innovation in personal systems and printing, expanding into new growth areas like 3D printing, and optimizing operations for profitability in a challenging market.
⚔️ What's The Competition
The personal computing and printing markets are highly competitive and characterized by rapid technological advancements, intense pricing pressure, and significant economies of scale. HP faces competition from a diverse range of global players, including established tech giants and niche specialists. Differentiation often relies on brand, performance, design, price, and ecosystem integration, particularly in commercial segments.
📊 Market Context
- Total Addressable Market - The combined global PC and printer market is valued over US$270 billion in 2025, projected to grow at a CAGR of 5-8% driven by AI PCs, hybrid work, and industrial 3D printing.
- Key Trend - Integration of AI capabilities into PCs and a shift towards subscription-based models for printing solutions are defining market trends.
Competitor
Description
vs HPQ
Dell Technologies
A major competitor in the commercial PC market, offering a wide range of desktops, notebooks, and IT services.
Competes directly with HP in corporate sales, focusing on end-to-end IT solutions. Often seen as a primary rival for enterprise customers.
Lenovo Group Ltd.
The largest global PC vendor, known for its ThinkPad line and aggressive pricing in consumer and commercial markets.
Challenges HP across all PC segments, particularly with strong market share in Asia. Price competitiveness is a key differentiator.
Canon Inc.
A leading provider of imaging and optical products, including a strong presence in the office and commercial printing segment.
Directly competes with HP's printing division, especially in laser printers and multifunction devices for businesses, focusing on image quality and reliability.
Market Share - Global Traditional PC Shipments Q4 2024
Lenovo
24.5%
HP
19.9%
Dell
14.4%
Apple
10.1%
Others
31.1%
📊 Valuation & Analysis
📈 Wall Street Summary
Analyst Rating Distribution - 1 Strong Sell, 3 Sell, 10 Hold, 2 Buy, 1 Strong Buy
1
3
10
2
1
12-Month Price Target Range
Low Target
US$18
-7%
Average Target
US$25
+29%
High Target
US$30
+54%
Closing: US$19.44 (30 Jan 2026)
🚀 The Bull Case - Upside to US$30
1. AI PC Refresh Cycle
Medium Probability
The introduction of AI-powered PCs could spur a significant upgrade cycle in both commercial and consumer markets, driving higher unit sales and potentially boosting average selling prices for HP's Personal Systems division. This could lead to a revenue increase of US$5 billion-US$10 billion over the next two years.
2. Managed Print Services Expansion
High Probability
Expanding contracts for managed print services in enterprise and SMB markets provides a stable, recurring revenue stream with higher margins. Successful execution could add US$1 billion-US$2 billion in annual high-margin revenue and improve overall profitability.
3. Shareholder Returns Program
Low Probability
HP's strong free cash flow generation allows for continued share buybacks and a healthy dividend, which can enhance shareholder value and provide a floor for the stock price. An aggressive capital return program could reduce share count by 5-7% annually, boosting EPS.
🐻 The Bear Case - Downside to US$18
1. Sustained PC Market Contraction
Medium Probability
A prolonged global economic slowdown or saturation of the PC market could lead to further declines in unit shipments and revenue for HP's Personal Systems, potentially reducing annual revenue by US$3 billion-US$5 billion and putting pressure on operating margins.
2. Declining Print Volumes & Supplies Demand
High Probability
Increased digitalization and a shift away from physical documents could accelerate the decline in print volumes and, critically, high-margin supplies demand. This could erode a key source of HP's profitability, reducing gross profit by 10-15% over time.
3. Intensified Competition and Price Wars
Medium Probability
Aggressive pricing strategies from competitors like Lenovo and Dell, especially in emerging markets, could force HP to lower its prices, leading to margin compression and market share loss across its hardware segments, impacting profitability by 50-100 basis points.
🔮 Final thought: Is this a long term relationship?
Owning HPQ for a decade requires conviction in the company's ability to navigate mature and cyclical markets while successfully diversifying into higher-growth areas. Its strong brand and entrenched market position in PC and printing provide durability, but sustained innovation in areas like AI PCs and 3D printing is crucial. The recurring revenue from print supplies offers a degree of stability. Key risks include disruptive technologies and a permanent shift away from physical printing. Management's strategic execution will be paramount in maintaining relevance and profitability in an evolving tech landscape.
📋 Appendix
Financial Performance
Metric
31 Oct 2025
31 Oct 2024
31 Oct 2023
Income Statement
Revenue
US$55.30B
US$53.56B
US$53.72B
Gross Profit
US$11.39B
US$11.82B
US$11.51B
Operating Income
US$3.62B
US$4.20B
US$4.22B
Net Income
US$2.53B
US$2.77B
US$3.26B
EPS (Diluted)
2.65
2.81
3.26
Balance Sheet
Cash & Equivalents
US$3.69B
US$3.24B
US$3.11B
Total Assets
US$41.77B
US$39.91B
US$37.00B
Total Debt
US$10.88B
US$10.90B
US$10.74B
Shareholders' Equity
US$-0.35B
US$-1.32B
US$-1.07B
Key Ratios
Gross Margin
20.6%
22.1%
21.4%
Operating Margin
6.6%
7.8%
7.9%
Return on Assets
-730.92
-209.75
-305.24
Analyst Estimates
Metric
Annual (31 Oct 2026)
Annual (31 Oct 2027)
EPS Estimate
US$3.10
US$3.21
EPS Growth
-0.5%
+3.5%
Revenue Estimate
US$56.0B
US$56.7B
Revenue Growth
+1.3%
+1.2%
Number of Analysts
17
15
Valuation Ratios
| Metric | Value | Description |
|---|---|---|
| P/E Ratio (TTM) | 7.31 | The trailing Price-to-Earnings ratio indicates how much investors are willing to pay for each dollar of past earnings over the last twelve months. |
| Forward P/E | 6.06 | The forward Price-to-Earnings ratio reflects investor expectations for future earnings, based on analyst consensus estimates for the next twelve months. |
| Price/Sales (TTM) | 0.33 | The Price-to-Sales ratio compares a company's stock price to its revenue per share, providing an indication of how much investors are paying for each dollar of sales. |
| EV/EBITDA | 5.60 | Enterprise Value to EBITDA measures a company's total value relative to its earnings before interest, taxes, depreciation, and amortization, often used to compare similar companies across different capital structures. |
| Operating Margin | 0.07 | Operating Margin indicates how much profit a company makes from its core operations for every dollar of revenue, before accounting for taxes and interest. |
Peer Comparison
| Company | Market Cap (B) | P/E Ratio | P/B Ratio | Revenue Growth (%) | Operating Margin (%) |
|---|---|---|---|---|---|
| HP Inc. (Target) | 18.17 | 7.31 | N/A | 4.2% | 7.4% |
| Dell Technologies | 78.29 | 24.33 | 7.82 | 5.0% | 13.3% |
| Lenovo Group Ltd. | 13.73 | 9.40 | 2.48 | 22.0% | 8.0% |
| Canon Inc. | 35.13 | 17.53 | 1.23 | 7.9% | 9.9% |
| Sector Average | — | 17.09 | 3.84 | 11.6% | 10.4% |