The HP story

What drives the business

• HP combines the volume of personal computing with recurring printer supplies, and Printing has long contributed the larger share of profit despite representing 25% of revenue in the quarter to July 2026.
• Its Personal Systems portfolio spans commercial PCs, workstations, consumer devices and gaming, with AI PCs and workstations designed to process AI locally and security and lifecycle services supporting customer relationships.
• Most revenue comes through channel resellers, serving consumers, small businesses, public institutions and large enterprises rather than relying primarily on direct distribution.
• Commercial Personal Systems revenue grew 22% and Consumer Personal Systems revenue grew 10% in the quarter to July 2026, while management reported gains in premium products and improved memory supply.
• Printing covers home and office printers, graphics and 3D printing, but its recurring supplies revenue declined 3% and hardware units declined 7% in the quarter to July 2026.

What the price assumes

At $31.32, the reverse DCF implies annual growth of -6.6% in free cash flow after stock-based pay for ten years, using a 10.2% discount rate.

HP delivered -8.6% annual growth on that measure over the last 10 years, so the implied path requires a slower contraction than its historical record.

The TenQ check sets a -2.3% bar by moving that historical growth rate halfway toward 4%, meaning the price implies a steeper contraction than the check's benchmark.

Value HPQ on your own assumptions

What could change the story

• Revenue growth has not translated into profit growth, with revenue rising 8.1% over the last twelve months while profit growth was -7.2%, leaving HP passing 1 of 6 Growth checks.
• Personal Systems' operating margin fell to 4.6% in the quarter to July 2026 from 5.4% a year earlier, showing that higher revenue did not preserve PC margins amid component cost pressures.
• Lower-priced competing ink and toner can pressure the recurring supplies business that supports Printing's profitability.
• At July 2026, total debt of $9.2 billion compared with $4.2 billion in cash and short-term investments, while negative equity and a near-term liquidity ratio of 0.79 contributed to failed financial health checks.
• The fiscal 2026 productivity plan relies primarily on AI adoption and efficiencies that enable workforce reductions, but HP warns that investment needs, changing business models and technology could erode the sustainability of its cost savings.

What to watch next

• For the fiscal 2026 fourth quarter, HP estimates GAAP diluted earnings per share of $0.74 to $0.84 and non-GAAP diluted earnings per share of $0.69 to $0.79, both including a $0.08 benefit from estimated tariff refunds.
• HP raised its fiscal 2026 free cash flow estimate to $3.0 to $3.2 billion, making cash generation and movements in inventory, receivables and payables important checks on the earnings outlook.
• The next releases will show whether commercial PC revenue growth is accompanied by steadier shipments and margins, and whether the decline in Printing supplies moderates.

Sources

• HP's earnings release, filed with the SEC
• Its latest 10-Q or 10-K, for the risk factors
• The HPQ stock report, for every figure and check