Computer hardware giant HP (HPQ) is achieving significant growth in its commercial PC business. Furthermore, analysts expect robust demand ahead as more workers return to offices and enterprise technology spending gears up. The company recently reported solid quarterly earnings, topping Street consensus estimates. Also, the stock currently looks undervalued at its current price. So, is HPQ an ideal investment now? Read on.HP Inc. (NYSE:HPQ) in Palo Alto, Calif., provides personal computing and other access devices, imaging and printing products, and related technologies, solutions, and services worldwide. HPQ shares have gained 60.9% in price over the past year and 43.5% year-to-date to close yesterday’s trading session at $35.28. The stock is currently trading above its 50-day and 200-day moving averages.
The computer hardware giant posted better-than-expected fourth-quarter results and a robust outlook for the year, and its stock rose in price on Nov. 24 on the news the company’s net revenue increased 9.3% year-over-year to $16.68 billion, which was $1.25 billion more than the consensus expectation. The revenue increase can be attributed mainly to the company’s growth in the PC business and higher average selling prices. According to UBS analyst David Vogt, average selling prices were up more than 6% sequentially for HPQ in the quarter. Its non-GAAP net earnings came in at $1.08 billion, indicating an increase of 28.9% year-over-year, while its EPS was $0.94, beating the Street estimate by 6.8%.
The demand for HPQ’s PC is growing rapidly and is outpacing supply. HP CEO Enrique Lores expects robust demand ahead for both PCs and printers as offices reopen. Moreover, the company ended the quarter with a higher-than-normal order backlog, particularly in PCs. As more workers return to office and enterprise technology spending gears up, demand should increase, eventually generating revenues. “We believe the handoff to enterprise strength as workers return to the office in a hybrid manner will boost commercial PC demands for multiple quarters,” said Citi analyst Jim Suva. For its fiscal year 2022, HPQ expects its non-GAAP diluted net EPS to be in the range of $4.07 - $4.27 and to generate free cash flow of at least $4.50 billion.