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HPQ Valuation

HPQ Valuation. Brian Phelan. Agenda. Background on HP NEA Forecast Segment Revenue Models Recommendation. Industry Structure. Source: Ibis World US. Industry Structure. Source: Ibis World US. Background. Restructuring Billions in Impaired acquisitions Layoffs $100m bribery fine.

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HPQ Valuation

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  1. HPQ Valuation Brian Phelan

  2. Agenda • Background on HP • NEA Forecast • Segment Revenue • Models • Recommendation

  3. Industry Structure Source: Ibis World US

  4. Industry Structure Source: Ibis World US

  5. Background • Restructuring • Billions in Impaired acquisitions • Layoffs • $100m bribery fine

  6. NEA Forecast

  7. Total Revenue

  8. Segment Revenue

  9. Segment Revenue

  10. DCF Model

  11. DCF Model

  12. Residual Income

  13. Abnormal Growth Model

  14. HPQ Recommendation • HPQ trading at $31.77 per share • Valuation of that amount assumes HP will grow revenue before 2018 or that growth after will be greater than inflation • 5/6 segments are forecasted to loss revenue over that time frame • Negative price pressure in 5/6 margins

  15. HPQ Recommendation • HPQ is valley royalty • Hard times have hit • Cutting variable and fixed costs to maintain profitability as revenue falls • SELL

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