NEW YORK (
) has been reiterated by TheStreet Ratings as a hold with a ratings score of C. Among the primary strengths of the company is its attractive valuation levels, considering its current price compared to earnings, book value and other measures. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.
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Highlights from the ratings report include:
- The revenue fell significantly faster than the industry average of 59.2%. Since the same quarter one year prior, revenues slightly dropped by 3.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- HEWLETT-PACKARD CO's earnings per share declined by 23.8% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, HEWLETT-PACKARD CO reported lower earnings of $3.27 versus $3.69 in the prior year. This year, the market expects an improvement in earnings ($4.07 versus $3.27).
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Computers & Peripherals industry and the overall market, HEWLETT-PACKARD CO's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Computers & Peripherals industry. The net income has significantly decreased by 30.9% when compared to the same quarter one year ago, falling from $2,304.00 million to $1,593.00 million.
Hewlett-Packard Company and its subsidiaries provide products, technologies, software, solutions, and services to individual consumers and small- and medium-sized businesses (SMBs), as well as to the government, health, and education sectors worldwide. The company has a P/E ratio of 7.7, equal to the average computer hardware industry P/E ratioand below the S&P 500 P/E ratio of 17.7. Hewlett-Packard has a market cap of $40.02 billion and is part of the
industry. Shares are down 20.9% year to date as of the close of trading on Friday.
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--Written by a member of TheStreet Ratings Staff.
TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.