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HP (HPQ) Exceeds Market Returns: Some Facts to Consider

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In the latest close session, HP (HPQ - Free Report) was up +1.81% at $27.03. The stock exceeded the S&P 500, which registered a gain of 0.58% for the day.

Shares of the personal computer and printer maker witnessed a loss of 8.57% over the previous month, trailing the performance of the Computer and Technology sector with its gain of 6.37%, and the S&P 500's gain of 3.68%.

The upcoming earnings release of HP will be of great interest to investors. It is anticipated that the company will report an EPS of $0.91, marking a 2.15% fall compared to the same quarter of the previous year. Meanwhile, the latest consensus estimate predicts the revenue to be $14.46 billion, indicating a 2.91% increase compared to the same quarter of the previous year.

For the full year, the Zacks Consensus Estimates project earnings of $3.1 per share and a revenue of $54.99 billion, demonstrating changes of -8.28% and +2.67%, respectively, from the preceding year.

Investors should also pay attention to any latest changes in analyst estimates for HP. These latest adjustments often mirror the shifting dynamics of short-term business patterns. With this in mind, we can consider positive estimate revisions a sign of optimism about the business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.

The Zacks Rank system, spanning from #1 (Strong Buy) to #5 (Strong Sell), boasts an impressive track record of outperformance, audited externally, with #1 ranked stocks yielding an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. HP is holding a Zacks Rank of #3 (Hold) right now.

Digging into valuation, HP currently has a Forward P/E ratio of 8.55. This indicates a discount in contrast to its industry's Forward P/E of 14.07.

It's also important to note that HPQ currently trades at a PEG ratio of 2.14. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. As the market closed yesterday, the Computer - Micro Computers industry was having an average PEG ratio of 1.54.

The Computer - Micro Computers industry is part of the Computer and Technology sector. With its current Zacks Industry Rank of 42, this industry ranks in the top 18% of all industries, numbering over 250.

The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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