Earnings Quality
HPQ-US reported relatively weak net income margins for the last twelve months (-10.5% vs. peer median of 15.5%). This weak margin performance and relatively conservative accrual policy (19.4% vs. peer median of 7.0%) suggest the company might likely be understating its net income, possibly to the extent that there might even be some sandbagging of the reported net income numbers.
HPQ-US’s accruals over the last twelve months are positive suggesting a buildup of reserves. In addition, the level of accrual is greater than the peer median — which suggests a relatively strong buildup in reserves compared to its peers.
Trend Charts
Company Profile
Hewlett-Packard Co. provides products, technologies, software, solutions and services to individual consumers, small- and medium-sized businesses and large enterprises, including customers in the government, health and education sectors. It operates through seven business segments: Personal Systems Group, Services Group, Imaging and Printing Group, Enterprise Servers, Storage and Networking Group, HP Software, HP Financial Services and Corporate Investments Group. The Personal System Group (PSG) segment provides commercial personal computers, consumer PCs, workstations, calculators and other related accessories, software and services for the commercial and consumer markets. The Services segment provides consulting, outsourcing and technology services across infrastructure, applications and business process domains. It serves clients by leveraging investments in consulting and support professionals, infrastructure technology, applications, standardized methodologies and global supply and delivery. The Imaging and Printing Group (IPG) segment provides consumer and commercial printer hardware, supplies, media and scanning devices. IPG is also focused on imaging solutions in the commercial markets. The Enterprise Servers, Storage and Networking (ESSN) segment provides server, storage and networking products in a number of categories. Its integrated solution enables enterprise and service provider clients to deliver HP CloudSystem, the Cloud Service Automation software which offers as a service in a private, public or hybrid cloud environment. The HP Software segment provides enterprise IT management software, information management solutions and security intelligence/risk management solutions. Its solutions are delivered in the form of traditional software licenses or as software-as-a-service. The HP Financial Services (HPFS) segment supports and enhances HP’s global product and service solutions, providing a broad range of value-added financial life cycle management services. It enables its worldwide customers to acquire complete IT solutions, including hardware, software and services. The Corporate Investments segment includes Business Intelligence solutions, HP Labs, webOS software and certain business incubation projects. Its Business Intelligence solutions enable businesses to standardize on consistent data management schemes, connect and share data across the enterprise and apply analytics. The company was founded by William R. Hewlett and David Packard in 1939 and is headquartered in Palo Alto, CA.
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This article was originally written by abha.dawesar, and posted on CapitalCube.
