Here's Why HP (HPQ) Fell More Than Broader Market

The upcoming earnings release of HP will be of great interest to investors. The company's upcoming EPS is projected at $0.66, signifying a 12.00% drop compared to the same quarter of the previous year. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $14.6 billion, up 4.82% from the year-ago period.

For the full year, the Zacks Consensus Estimates project earnings of $2.98 per share and a revenue of $58.26 billion, demonstrating changes of -4.49% and +5.37%, respectively, from the preceding year.

Investors might also notice recent changes to analyst estimates for HP. Such recent modifications usually signify the changing landscape of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. Right now, HP possesses a Zacks Rank of #3 (Hold).

Looking at valuation, HP is presently trading at a Forward P/E ratio of 9.68. This denotes a discount relative to the industry average Forward P/E of 24.85.

We can additionally observe that HPQ currently boasts a PEG ratio of 4.86. Comparable to the widely accepted P/E ratio, the PEG ratio also accounts for the company's projected earnings growth. The average PEG ratio for the Computer - Micro Computers industry stood at 2.62 at the close of the market yesterday.

The Computer - Micro Computers industry is part of the Computer and Technology sector. At present, this industry carries a Zacks Industry Rank of 30, placing it within the top 13% of over 250 industries.

The Zacks Industry Rank assesses the vigor of our specific industry groups by computing the average Zacks Rank of the individual stocks incorporated in the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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This article originally published on Zacks Investment Research (zacks.com).

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