Stock Analysis on Net
Stock Analysis on Net

HP Inc. (NYSE:HPQ)

$22.49

This company has been moved to the archive! The financial data has not been updated since August 29, 2019.

Economic Value Added (EVA)

Microsoft Excel

EVA is registered trademark of Stern Stewart.

Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.

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Economic Profit

HP Inc., economic profit calculation

US$ in millions

Microsoft Excel
12 months ended: Oct 31, 2018 Oct 31, 2017 Oct 31, 2016 Oct 31, 2015 Oct 31, 2014 Oct 31, 2013
Net operating profit after taxes (NOPAT)1
Cost of capital2
Invested capital3
 
Economic profit4

Based on: 10-K (reporting date: 2018-10-31), 10-K (reporting date: 2017-10-31), 10-K (reporting date: 2016-10-31), 10-K (reporting date: 2015-10-31), 10-K (reporting date: 2014-10-31), 10-K (reporting date: 2013-10-31).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2018 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =

Item Description The company
Economic profit Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. HP Inc. economic profit decreased from 2016 to 2017 and from 2017 to 2018.

Net Operating Profit after Taxes (NOPAT)

HP Inc., NOPAT calculation

US$ in millions

Microsoft Excel
12 months ended: Oct 31, 2018 Oct 31, 2017 Oct 31, 2016 Oct 31, 2015 Oct 31, 2014 Oct 31, 2013
Net earnings
Deferred income tax expense (benefit)1
Increase (decrease) in allowance for doubtful accounts2
Increase (decrease) in deferred revenue3
Increase (decrease) in product warranty liabilities4
Increase (decrease) in restructuring plans, accrued balance5
Increase (decrease) in equity equivalents6
Interest expense on borrowings
Interest expense, operating lease liability7
Adjusted interest expense on borrowings
Tax benefit of interest expense on borrowings8
Adjusted interest expense on borrowings, after taxes9
(Gain) loss on marketable securities
Interest income
Investment income, before taxes
Tax expense (benefit) of investment income10
Investment income, after taxes11
(Income) loss from discontinued operations, net of tax12
Net operating profit after taxes (NOPAT)

Based on: 10-K (reporting date: 2018-10-31), 10-K (reporting date: 2017-10-31), 10-K (reporting date: 2016-10-31), 10-K (reporting date: 2015-10-31), 10-K (reporting date: 2014-10-31), 10-K (reporting date: 2013-10-31).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in allowance for doubtful accounts.

3 Addition of increase (decrease) in deferred revenue.

4 Addition of increase (decrease) in product warranty liabilities.

5 Addition of increase (decrease) in restructuring plans, accrued balance.

6 Addition of increase (decrease) in equity equivalents to net earnings.

7 2018 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =

8 2018 Calculation
Tax benefit of interest expense on borrowings = Adjusted interest expense on borrowings × Statutory income tax rate
= × 23.30% =

9 Addition of after taxes interest expense to net earnings.

10 2018 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 23.30% =

11 Elimination of after taxes investment income.

12 Elimination of discontinued operations.

Item Description The company
NOPAT Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. HP Inc. NOPAT increased from 2016 to 2017 but then decreased significantly from 2017 to 2018.

Cash Operating Taxes

HP Inc., cash operating taxes calculation

US$ in millions

Microsoft Excel
12 months ended: Oct 31, 2018 Oct 31, 2017 Oct 31, 2016 Oct 31, 2015 Oct 31, 2014 Oct 31, 2013
Provision for (benefit from) taxes on earnings
Less: Deferred income tax expense (benefit)
Add: Tax savings from interest expense on borrowings
Less: Tax imposed on investment income
Cash operating taxes

Based on: 10-K (reporting date: 2018-10-31), 10-K (reporting date: 2017-10-31), 10-K (reporting date: 2016-10-31), 10-K (reporting date: 2015-10-31), 10-K (reporting date: 2014-10-31), 10-K (reporting date: 2013-10-31).

Item Description The company
Cash operating taxes Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. HP Inc. cash operating taxes decreased from 2016 to 2017 but then increased from 2017 to 2018 exceeding 2016 level.

Invested Capital

HP Inc., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel
Oct 31, 2018 Oct 31, 2017 Oct 31, 2016 Oct 31, 2015 Oct 31, 2014 Oct 31, 2013
Notes payable and short-term borrowings
Long-term debt, excluding current portion
Operating lease liability1
Total reported debt & leases
Total HP stockholders’ equity (deficit)
Net deferred tax (assets) liabilities2
Allowance for doubtful accounts3
Deferred revenue4
Product warranty liabilities5
Restructuring plans, accrued balance6
Equity equivalents7
Accumulated other comprehensive (income) loss, net of tax8
Non-controlling interests
Adjusted total HP stockholders’ equity (deficit)
Available-for-sale investments9
Invested capital

Based on: 10-K (reporting date: 2018-10-31), 10-K (reporting date: 2017-10-31), 10-K (reporting date: 2016-10-31), 10-K (reporting date: 2015-10-31), 10-K (reporting date: 2014-10-31), 10-K (reporting date: 2013-10-31).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of allowance for doubtful accounts receivable.

4 Addition of deferred revenue.

5 Addition of product warranty liabilities.

6 Addition of restructuring plans, accrued balance.

7 Addition of equity equivalents to total HP stockholders’ equity (deficit).

8 Removal of accumulated other comprehensive income.

9 Subtraction of available-for-sale investments.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. HP Inc. invested capital increased from 2016 to 2017 but then decreased significantly from 2017 to 2018.

Cost of Capital

HP Inc., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Short- and long-term debt3 ÷ = × × (1 – 23.30%) =
Operating lease liability4 ÷ = × × (1 – 23.30%) =
Total:

Based on: 10-K (reporting date: 2018-10-31).

1 US$ in millions

2 Equity. See details »

3 Short- and long-term debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Short- and long-term debt3 ÷ = × × (1 – 35.00%) =
Operating lease liability4 ÷ = × × (1 – 35.00%) =
Total:

Based on: 10-K (reporting date: 2017-10-31).

1 US$ in millions

2 Equity. See details »

3 Short- and long-term debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Short- and long-term debt3 ÷ = × × (1 – 35.00%) =
Operating lease liability4 ÷ = × × (1 – 35.00%) =
Total:

Based on: 10-K (reporting date: 2016-10-31).

1 US$ in millions

2 Equity. See details »

3 Short- and long-term debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Short- and long-term debt3 ÷ = × × (1 – 35.00%) =
Operating lease liability4 ÷ = × × (1 – 35.00%) =
Total:

Based on: 10-K (reporting date: 2015-10-31).

1 US$ in millions

2 Equity. See details »

3 Short- and long-term debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Short- and long-term debt3 ÷ = × × (1 – 35.00%) =
Operating lease liability4 ÷ = × × (1 – 35.00%) =
Total:

Based on: 10-K (reporting date: 2014-10-31).

1 US$ in millions

2 Equity. See details »

3 Short- and long-term debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Short- and long-term debt3 ÷ = × × (1 – 35.00%) =
Operating lease liability4 ÷ = × × (1 – 35.00%) =
Total:

Based on: 10-K (reporting date: 2013-10-31).

1 US$ in millions

2 Equity. See details »

3 Short- and long-term debt. See details »

4 Operating lease liability. See details »

Economic Spread Ratio

HP Inc., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Oct 31, 2018 Oct 31, 2017 Oct 31, 2016 Oct 31, 2015 Oct 31, 2014 Oct 31, 2013
Selected Financial Data (US$ in millions)
Economic profit1
Invested capital2
Performance Ratio
Economic spread ratio3
Benchmarks
Economic Spread Ratio, Competitors4
Apple Inc.
Arista Networks Inc.
Cisco Systems Inc.
Super Micro Computer Inc.

Based on: 10-K (reporting date: 2018-10-31), 10-K (reporting date: 2017-10-31), 10-K (reporting date: 2016-10-31), 10-K (reporting date: 2015-10-31), 10-K (reporting date: 2014-10-31), 10-K (reporting date: 2013-10-31).

1 Economic profit. See details »

2 Invested capital. See details »

3 2018 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =

4 Click competitor name to see calculations.

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. HP Inc. economic spread ratio deteriorated from 2016 to 2017 and from 2017 to 2018.

Economic Profit Margin

HP Inc., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Oct 31, 2018 Oct 31, 2017 Oct 31, 2016 Oct 31, 2015 Oct 31, 2014 Oct 31, 2013
Selected Financial Data (US$ in millions)
Economic profit1
 
Net revenue
Add: Increase (decrease) in deferred revenue
Adjusted net revenue
Performance Ratio
Economic profit margin2
Benchmarks
Economic Profit Margin, Competitors3
Apple Inc.
Arista Networks Inc.
Cisco Systems Inc.
Super Micro Computer Inc.

Based on: 10-K (reporting date: 2018-10-31), 10-K (reporting date: 2017-10-31), 10-K (reporting date: 2016-10-31), 10-K (reporting date: 2015-10-31), 10-K (reporting date: 2014-10-31), 10-K (reporting date: 2013-10-31).

1 Economic profit. See details »

2 2018 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net revenue
= 100 × ÷ =

3 Click competitor name to see calculations.

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. HP Inc. economic profit margin deteriorated from 2016 to 2017 and from 2017 to 2018.