HPQ, HP Inc.
Our security solutions provide layered resiliency using enhanced features such as containment and isolation technology as well as the use of AI deep-learning to identify and remove malware threats.
Read top to bottom, the owner's questions in the order an owner asks them: what the business is, whether the record holds, whether it survives and is any good, and what you would be paying. New to the questions? Start with the Method.
The business in brief
read the 10-K →What this business is and what moves its needle, read from the numbers in its filings. The quantitative detail is in the sections below; the verdict is left to you.
- What it is
- Revenue is Products (94%) and Services (6%).
- What moves the needle
- Volume against price, and shelf position. What decides it: whether it can raise prices without losing the customer, and whether the brand still commands its margin.
- Is it a good business?
- Return on capital has run high across the record (median 66%, above 15% in 6 of 6 years), though buybacks and expensed R&D and brands shrink the capital base, so the figure overstates the underlying economics. The steadier read is owner earnings: roughly 6% of revenue reaches owners as cash, consistently, and customers and suppliers fund the business through negative working capital. High, durable returns can mark a moat, but whether this one is real pricing power or an accounting artifact is the judgment the 10-K is for.
Every line here is arithmetic from the company's own filings, not a model's opinion, and each figure appears in full in the sections below.
Where the money comes from
read the 10-K →Products is 94% of revenue, so this is largely a single-line business.
- Products94%$52.0B
- Services6%$3.3B
From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.
The record, 2016–2025
realized figures from each filing, no estimates| 2016’16 | 2017’17 | 2018’18 | 2019’19 | 2020’20 | 2021’21 | 2022’22 | 2023’23 | 2024’24 | 2025’25 | TTMTTMApr 2026 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| RevenueRevenue | $48.2B | $52.1B | $58.5B | $58.8B | $56.6B | $63.5B | $62.9B | $53.7B | $53.6B | $55.3B | $57.4B |
| Gross marginGross mgn | 19% | 18% | 18% | 19% | 18% | 21% | 19% | 21% | 22% | 21% | 20% |
| Operating marginOp. mgn | 7.4% | 6.5% | 6.6% | 6.6% | 6.1% | 8.4% | 7.2% | 6.4% | 7.1% | 5.7% | 5.3% |
| Net incomeNet inc. | $2.5B | $2.5B | $5.3B | $3.2B | $2.8B | $6.5B | $3.1B | $3.3B | $2.8B | $2.5B | $2.6B |
| EPS (diluted)EPS | $1.43 | $1.48 | $3.26 | $2.07 | $1.98 | $5.36 | $2.98 | $3.26 | $2.81 | $2.65 | $2.75 |
| Owner earningsOwner earn. | $2.8B | $3.3B | $4.0B | $4.0B | $3.7B | $5.8B | $3.7B | $3.0B | $3.2B | $2.8B | $3.8B |
| ROICROIC | — | — | 1666% | — | — | 415% | 69% | 66% | 64% | 54% | 46% |
| Cash & investmentsCash+inv | $6.3B | $8.2B | $5.2B | $4.5B | $4.9B | $4.3B | $3.1B | $3.1B | $3.2B | $3.7B | $4.8B |
| Net debt / (cash)Net debt | $428M | ($371M) | $869M | $614M | $1.4B | $2.8B | $7.8B | $6.3B | $6.4B | $5.9B | $5.5B |
| Dividends / shareDiv/sh | $0.49 | $0.53 | $0.55 | $0.64 | $0.70 | $0.77 | $0.99 | $1.04 | $1.09 | $1.14 | — |
| Book value / shareBVPS | $-2.23 | $-2.00 | $-0.39 | $-0.79 | $-1.60 | $-1.35 | $-2.88 | $-1.07 | $-1.34 | $-0.36 | $-0.16 |
Owner’s Scorecard
Will it survive?
- ComfortableOperating income $3.2B ÷ interest expense $567M
Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient, it says solvent, not cheap.
- ModerateTotal debt $9.6B ÷ operating income $3.2B
Years of operating profit it would take to repay all debt. A first read, not a credit rating: it's gross debt (not netted against cash) over EBIT (not EBITDA), and a cyclical year distorts it.
- Debt, net of cash $4.8BModest net debtCash $3.7B + ST investments $1.1B − debt $9.6B
Netting $4.8B of cash and short-term investments against $9.6B of debt leaves $4.8B owed, about 1.5× a year's operating profit, versus the gross figure above. It also holds $61M in longer-dated marketable securities; counting those, it sits at $4.7B of net debt. Net debt is the leverage figure that matters; the gross ratio above ignores the cash already set against it. Strategic or illiquid investments aren't counted here.
- Negative, funded by othersDSO 38 + DIO 71 − DPO 150 days
Days cash is tied up between paying suppliers and collecting from customers. A negative cycle is a quiet moat: suppliers and customers fund the operation (Buffett's “float”), the company grows on other people's money.
Is it a good business?
- ExceptionalNOPAT $3.0B ÷ invested capital $5.6B (debt + equity − cash)
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; below ~8% the company may destroy value as it grows. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
- SolidOwner Earnings $2.8B = operating cash $3.7B − capex $897M
What an owner could take out without starving the business. That's 5% of revenue. Treating stock comp as the real expense it is (less $522M of SBC) leaves $2.3B. Honest caveat: capex here blends maintenance and growth, so steady-state Owner Earnings may run higher (see capex vs. depreciation).
- Cash-backedCash from ops $3.7B ÷ net income $2.5B
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.
How is the cash used?
- Returns about halfDividends + buybacks $1.9B ÷ Owner Earnings $2.8B
Of $2.8B Owner Earnings, $1.9B (69%) went back to shareholders, $1.1B dividends, $850M buybacks. Net of $522M stock comp, the real buyback was about $328M. Returning most of it signals a mature cash machine; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
- Investing or harvesting? 0.98×MaintainingCapex $897M ÷ depreciation $916M
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.
Durability & moat, 2016–2025
A moat is a high return that doesn’t fade, reinvested at high returns. Here is what the record says, judgments, not another chart of the numbers.
- Profitable years 10 of 10
Never lost money over the record, the earnings stability Graham insisted on.
- Return on capital ≥ 15% 6 of 6 yrs
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
- Operating margin 7% (FY2016) → 6% (FY2025)
Margins held roughly steady across the record.
- Reinvestment, incremental ROIC 8%
Reinvested capital earned only a modest return, growth is getting expensive.
- Owner earnings growth −0%/yr
Free cash to owners shrank about 0% a year over the record.
- Worst year 2025 · 5.7% op. margin
Stayed profitable even in its hardest year, the resilience that survives recessions.
- Dividend record rising
Paid and raised the dividend across the record, the continuity Graham prized.
Solvent is not the same as cheap; growing is not the same as good. These are vital signs, not a verdict, the judgment is yours, and the filing is one click away.
How the cash was used, 2016–2025
Over the record, the business generated $42.3B of operating cash, and how management split it is, as Buffett insists, the job that matters most. Here it reads as a mature cash machine, most of what it earns goes straight back to owners.
- Reinvested$6.1B · 14%
- Dividends$9.8B · 23%
- Buybacks$24.2B · 57%
- Retained (debt / cash)$2.2B · 5%
It reinvested $6.1B (14%) back into the business and returned $34.0B (80%) to owners, $9.8B in dividends, $24.2B in buybacks. Total debt rose $3.5B across the span.
Buybacks are gross of stock issued to employees; net of that, the real return to owners is lower (see Management & pay). And the mix alone doesn't grade management, what matters is the return earned on the dollars reinvested (see incremental ROIC in the durability report).
Management & pay
read the proxy →Two questions Buffett actually asks about pay: is stock compensation, a real expense, whatever the income statement pretends, quietly large, and is the top wildly out of line with the floor. He's no populist about it; he just wants pay that's rational and earned, and comp committees that aren't lapdogs.
- CEO pay ratio297:1
What the chief earns for every dollar the median employee makes, per the 2026 proxy. A high ratio isn't proof of anything, some businesses are genuinely top-heavy in scarce skill, but a runaway figure is where Buffett starts asking whether the board is doing its job or just keeping the chair company.
- Stock-based compensation$522M
The slice of the business handed to employees in shares this year, 1% of revenue, equal to 16% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. And note the trap, the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.
Graham’s defensive-investor test
3 of 6 metGraham gave the defensive investor seven numerical criteria in The Intelligent Investor. Here they are, run mechanically on the filings, his framework, not our verdict. Meeting them is a floor of safety, not a reason to buy; missing one is no veto, since many fine modern businesses fail his strictest liquidity tests by design. The worth is in seeing exactly where a company stands against the canon, every number sourced.
- Adequate size PassRevenue ≥ $2B · $55.3B
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
- Strong liquidity MissCurrent ratio ≥ 2× · 0.77×
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
- Conservative debt MissDebt ≤ working capital · $9.6B vs ($6.8B) WC
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
- Earnings stability PassA profit every year (10-yr record) · no losses
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
- Dividend record PassUninterrupted dividends · paid every year (10)
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
- Earnings growth MissEarnings +33% over the record · −17%
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
- Moderate price —P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Earnings are $2.65/share and book value $-0.36/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.
Graham would be the first to say a checklist is a starting point, not an answer. These are his defensive, bargain-hunter's tests, the cigar-butt lens. Buffett and Munger grew past it, paying fair prices for wonderful businesses; that lens lives in the moat and owner-earnings work above, and both still matter. Clearing Graham’s tests earns a closer look; failing them earns harder questions, not a dismissal.
What the price implies
reverse-DCFA price is the one input we don't pull, you bring it. Type today's close (read it off any broker or quote site) and see the owner-earnings growth you'd have to believe to justify it, set beside what HP Inc. has actually delivered. Nothing is stored; the number stays in your browser.
Enter a price above to run it.
Graham capped the multiple at 15×; Buffett and Munger let that rule go, a wonderful business can deserve 50× if the thesis holds. Read it as the bargain-hunter's floor, not a ceiling on good sense.
The discount rate is your interest rate, what a dollar years from now is worth today, anchored to the long-term Treasury yield (~4–5% today, plus whatever premium you want for risk). Drag it toward the risk-free rate and watch how much growth the price suddenly “needs”: interest rates are gravity on valuations.
Owner earnings $3.8B on 928M diluted shares; net debt $5.5B. This is a lens, not a price target, it says what you'd have to believe, not what the company is worth, and it runs on one year of (noisy) owner earnings at assumptions you can see and change.
What the filing emphasizes, FY2025
read the 10-K →Each year a 10-K must name what could go wrong, in the company's own words. Here are the ones Graham and Buffett would stop on, each set against the figure from the same filings that bears on it, anchored to a period you can find in the record above. We point; the judgment is yours.
- Pricing power & competitionMD&A
Whether the company sets its price or takes it. Durable pricing power is the surest mark of a moat; price competition is the surest mark there isn't one.
“In Personal Systems, we face challenges with a competitive pricing environment, variability in commodity costs, especially increasing memory and storage costs, and the uncertainty of the market's ability to absorb price increases.”
From the recordOperating margin5.3% now (TTM), off a 8.4% peak (FY2021) - Supplier & input dependenceRisk Factors
A choke point upstream. A sole or limited supplier can dictate terms, and a single shortage can stop the line.
“Additionally, in certain regions, we rely on a limited number of distributors, which could exacerbate these risks.”
From the recordGross-margin cushion (TTM)20% - Concentrated dependenceRisk Factors
What the whole business leans on, a product, a platform, a partner. Concentration cuts both ways, and the filing is where management has to admit it.
“Because we process proprietary information and sensitive or confidential data relating to our business (including data relating to employees, independent contractors and other personnel), our customers and third parties, breaches of our security measures or accidental loss, inadvertent disclosure or…”
From the recordOwner-earnings margin at stake (TTM)7% - Debt terms & refinancingMD&A
The fine print behind the debt. Covenants and near-term maturities decide who is really in control when a year goes badly.
“As of October 31, 2025, we maintained a $5.0 billion sustainability-linked senior unsecured committed revolving credit facility maturing August 1, 2029.”
From the recordBalance sheet (TTM)$4.8B modest net debt · interest covered 5.6× - Litigation & contingenciesRisk Factors
Claims an owner inherits. Most disclosure is boilerplate; this fires only on an actual matter, a named suit, a settlement, a contingency, a number.
“The patent litigation environment has also become more challenging due to the increasing use of venues with procedural and substantive rules and practices more favorable for patent asserters, including the availability of preliminary and permanent injunctions for non-competitors.”
A judgment, not a number, weigh it against the filing yourself. - Cyclicality & demandRisk Factors
How the business behaves when the economy turns. A cyclical earns its keep across the whole cycle, not at the peak.
“Economic downturns also may lead to future restructuring actions and associated expenses.”
From the recordWorst year on record5.7% operating margin (FY2025) - Regulation & policyMD&A
Rules that can rewrite the economics, tariffs, antitrust, data, export controls.
“Since April 2025, new, substantial tariffs have been imposed on imports to the United States.”
A judgment, not a number, weigh it against the filing yourself.
What changed, FY2025 vs FY2024
read the 10-K →Most of a 10-K is boilerplate carried over verbatim; the signal is in what's new. These lines appear this year and weren't there last, figure updates filtered out, so only the language shift remains.
- “Amortization of intangible assets Amortization of intangible assets increased in fiscal year 2025 primarily due to impairment charges of $65 million related to acquired customer contracts, customer lists and distribution agreements within the Printing segment and $27 million of technology and patent…”
- “New or sustained changes to tariffs and commodity costs could result in increased supply chain challenges, cost volatility, and consumer and economic uncertainty which may have a significant adverse impact to our results of operations and cash flows to the extent our efforts do not fully mitigate th…”
- “Interest and other, net Interest and other, net decreased $33 million in the fiscal year 2025 primarily due to a gain from a single litigation matter that does not relate to HP's ongoing business operations, lower factoring costs and interest expense on debt, partially offset by unfavorable currency…”
- “The increase in net revenue was primarily driven by products net revenue due to increased units in Personal Systems as well as an increase in services net revenue due to support services on hardware devices, partially offset by a decline in Printing net revenue and unfavorable currency impacts.”
- “We face increasing attention from the investment community, special interest groups, customers, enforcement authorities and other stakeholders, who may have conflicting views, related to our positions, performance, and disclosures relating to environmental and societal related matters and we are sub…”
Classic text analysis over the filing itself, no model wrote a word of this, and every quote is the company's own.
Peers, Computer hardware
The same industry, side by side on owner economics, compare, don't rank by a single number. ● marks best in the group.
| Company | Revenue | Gross margin | Op. margin | ROIC | Owner earn. margin |
|---|---|---|---|---|---|
| PEPPepsiCo Inc. | $93.9B | 54% | 12.2% | 15% | 8% |
| PGProcter & Gamble Co. | $84.3B | 51% | 24.3% | — | 17% |
| HPQHP Inc. | $55.3B | 21% | 5.7% | 54% | 5% |
| KOCoca-Cola Co. | $47.9B | 62% | 28.7% | 17% | 11% |
| CLColgate-Palmolive Co. | $20.4B | 60% | 16.2% | 36% | 18% |
| KDPKeurig Dr Pepper Inc. | $16.6B | 54% | 21.5% | 7% | 9% |
| KMBKimberly-Clark Corp. | $16.4B | 36% | 14.3% | 23% | 10% |
| STZConstellation Brands Inc. | $9.1B | 52% | 29.8% | 11% | 20% |