What changed
$HPQ — WATCHLIST 📊 | 6 MONTHS THESIS
🧭 Conviction: MED
🎯 FQ2 FY2026 (ends Apr) | reported May 27 | Rev $14.4B | EPS $0.86 vs $0.72 🟢 | Margin 8.8%
💡 Consensus had expected $0.72 EPS; actual $0.86 — a 19% beat. Market’s low valuation implies fear of further deterioration, but the beat could indicate that near-term earnings power is being underestimated. The gap is between a market pricing in continued decline and potentially stabilizing near-term financials.
🏢 Business Quality: 3 — low-digitization, secular decline in printing, intense competition in PCs, thin margins (3% net), high net debt/10
📊 Valuation: cheap — trailing P/E 6.7x vs sector ~12x, P/S 0.36x, EV/EBITDA ~10x; but typical for a declining business; may be cheap for a reason
🔮 Catalyst: Near-term earnings print already occurred; real catalyst would be further earnings beats or strategic shift (cost cuts, buybacks) demonstrating sustainable margins
⚖️ Watchlist only — HPQ’s cheapness is tempting, but without a clear