Here's Why 2017 Has Been A Remarkable Year For HP Inc (HPQ)

HP Inc. (NYSE:HPQ) is one of those technology companies that have demonstrated remarkable share price performance in the year so far. The company has generated high returns for investors in the year-to-date period and has the potential to exceed expectations in the next year.

HP is one of the two companies which came into existence post the split from the parent company — Hewlett-Packard Company — in November 2015. The other company was Hewlett Packard Enterprise Company (NYSE:HPE) .

The stock has been clocking solid returns since the split and has surged approximately 51.8%, substantially outperforming the S&P 500’s return of 26.4% during the same time frame. The major part of the rally has been witnessed this year. In the YTD period, the stock has appreciated 41.4%, while the S&P 500 has gained 19.3%.

Let’s check out the reasons for this impressive surge in share price and consider why HP will continue its momentum in the next year as well.

Revamped PC Business

Post the split, HP adopted a strategy of focusing on product innovation & differentiation, pricing, and marketing and sales activities to trigger demand for its PC products in the market. The company has launched various models under its PC product lines of EliteBook, Spectre and Pavilion Wave, in a year’s time.

The impact of these initiatives is well highlighted by the fact that the company has regained its top position in the PC segment by replacing Lenovo. Also, according to data compiled by IDC, during third-quarter 2017, the company’s PC shipments registered the sixth quarter of consecutive year-over-year growth after witnessing several quarters of decline.

Furthermore, the two independent research firms — Gartner and International Data Corporation — hinted that the PC industry has been moving toward stabilization. Therefore, we believe stabilization in PC shipments will benefit business prospects of companies like HP.

Print Segment Shines Again

The company’s efforts to revamp its printing business have also been commendable. It should be noted that HP has acquired Samsung (KS:005930) Electronics’ printer business. The acquisition is a strategic fit for HP as it has expanded the company’s printing business, with the addition of 6,500-plus printing patents owned by Samsung.

In addition to the above, the company is now focused on fortifying its 3D printing business capabilities. However, unlike 3D Systems (NYSE:DDD) and Stratasys (NASDAQ:SSYS) , which target all kinds of consumers, HP is emphasizing only on industrial markets due to their ability to afford a premium range of 3D printing solutions. It should be noted that even though HP has been operating in this space for almost five years now, it still lags behind 3D Systems and Stratasys.

These efforts have paid off well with the company registering the third consecutive quarter of print business revenue growth in fourth-quarter fiscal 2017.

Also, the company’s last quarterly results reflected revenue growth for the fifth consecutive quarter after witnessing a prolonged period of decline. Further, the Personal Systems and Print segments improved for the third straight quarter after 2010.

Stock Still Undervalued

The stock currently trades at a forward earnings estimate at 11.7x, which is way lower than the industry average of 17.8x. Given its recent track record of revenues and earnings growth, as well as the long-term forecast, the stock is highly undervalued which signifies that it is still left with significant upside potential.

Moreover, HP has a VGM Style Score of A. We note that our VGM score highlights the determining elements in a stock that can push the stock price higher. We can essentially filter out the negatives and focus on the positives which drive price.

Therefore, we consider that HP is one such technology stock which investors should keep in their portfolio. The stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

See This Ticker Free >>

HP Inc. (HPQ): Free Stock Analysis Report

3D Systems Corporation (DDD): Free Stock Analysis Report

Hewlett Packard Enterprise Company (HPE): Free Stock Analysis Report

Stratasys, Ltd. (SSYS): Free Stock Analysis Report

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