NEW YORK (TheStreet) -- Hewlett-Packard (HPQ) shares are down 0.51% to $33.13 in morning trading on Friday following reports that the company was nearing an acquisition deal with Computer Sciences (CSC) last month that never came to fruition.
The company would not confirm the reports with CEO Meg Whitman telling Bloomberg, "We talk to a lot of people, a lot of the time, but I can't comment on this one specifically."
The purchase of the IT services provider, which has a market cap of about $9.6 billion, would have been the largest for HP since 2011 when it purchased Autonomy for $10.3 billion.
The company took an $8.8 billion write down just a year after the purchase due to what it described as "serious accounting improprieties" that artificially inflated the database search technology provider's value.
Computer Sciences has been a takeover target of several companies for years, according to Bloomberg.
Computer Sciences stock is also down 0.21% to $67.57.
TheStreet Ratings team rates HEWLETT-PACKARD CO as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate HEWLETT-PACKARD CO (HPQ) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its attractive valuation levels and increase in stock price during the past year. We feel its strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- HEWLETT-PACKARD CO's earnings per share declined by 16.7% in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, HEWLETT-PACKARD CO's EPS of $2.62 remained unchanged from the prior years' EPS of $2.62. This year, the market expects an improvement in earnings ($3.65 versus $2.62).
- The revenue fell significantly faster than the industry average of 33.3%. Since the same quarter one year prior, revenues slightly dropped by 6.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- In its most recent trading session, HPQ has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- HPQ's debt-to-equity ratio of 0.79 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that HPQ's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.69 is low and demonstrates weak liquidity.
- You can view the full analysis from the report here: HPQ Ratings Report