In many ways, HP (HPQ) has received a stamp of approval from billionaire investor Warren Buffett.
Buffett's Berkshire Hathaway has revealed that it has 121 million HP shares in a new filling on Wednesday evening. The investment - valued at $ 4.2 billion - gives Berkshire Hathaway a nearly 11.4% stake in HP.
Shares increased by 11% in pre-market trading.
"Berkshire Hathaway is one of the most respected investors in the world and we welcome you as an investor at HP Inc," an HP spokesman told.
Buffett's investment makes sense for a number of reasons.
First, HP has been singing under CEO Enrique Lores as his career changes continue to bear fruit.
The company spent the analyst's profit forecasts in its first financial quarter (reported in late February), empowered by strong sales of computers and printers. HP said sales of commercial computers and printers have increased by 26% and 9%, respectively, since last year.
The power of commercial computers and printers removes the more muted performance of consumer products. HP said consumer PC sales fell by 1%, while consumer print sales fell by 23%.
Functional profit margins have increased 70 points in the HP personal system, but rejected 160 points in the printing business.
HP - the largest buyer of its stock under Lores - repurchased another $ 1.8 billion in its quarterly stock.
The company has provided an exciting overview despite the ongoing sales problems and the slow-moving PC market.
In the second quarter of the financial year, HP sees EPS in the range of $ 1.02 to $ 1.08. Analysts averaged $ 1.02 a share. The company has increased its annual EPS target to $ 4.18 to $ 4.38 per share from $ 4.07 to $ 4.27 previously. Wall Street was modeling for $ 4.17 a share.
As HP progressed through the epidemic - in part it was also encouraged by aggressive financial management that strengthened revenue - Lores has begun to put her stamp on the company's future with acquisitions.
The company said by the end of March it would buy $ 3.3 billion from co-operative solutions. That comes on the heels of the 2021 acquisition of peripheral peripheral manufacturer HyperX for $ 425 million.
Despite all these efforts, it can be argued that HP stock has not been properly valued by investors - which is why Buffett comes in and smells good.
HP only trades an upward earnings of 8.5 times. That is significantly lower than the repetition of PE in the S&P 500 of about 18.2 times. It is also surprisingly low for 12-year-old Xerox rival shares, considering the stronger performance of HP throughout the epidemic.
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Courtesy Grizler.com
