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Why HP Inc. Is Optimistic about Its Long-Term Growth

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Dec. 4 2020, Updated 10:52 a.m. ET

HP Inc. experienced strong revenue growth in fiscal 2017

Since its split from Hewlett Packard Enterprise (HPE) in November 2015, HP Inc. (HPQ) has turned in a solid performance. After HP Inc. experienced a revenue decline of 6.2% YoY (year-over-year) in fiscal 2016, its revenues rose ~8.0% YoY in fiscal 2017 to ~$52.1 billion. HP Inc. has been able to outperform analysts’ expectations and estimates on a consistent basis and achieved revenue growth of 14.0% in the fiscal first quarter.

As we learned in the previous part of this series, HP Inc. increased its PC shipments in a declining or saturated market. HP Inc.’s PC shipments have increased for the eighth consecutive quarter.

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On April 24, Catherine A. Lesjak, HP Inc.’s CFO, stated during the company’s annual meeting, “We delivered on our financial commitments while solidifying our leadership in the global personal systems, printing, and 3D printing categories. Our focus, discipline, innovation, and rigor enabled us to outperform the markets where we operate, generate predictable cash flows, and provide reliable returns to shareholders, while also investing to build a strong foundation for future growth.”

Total available market of $560 billion

HP Inc. has valued its total available market (or TAM) at $560.0 billion. Its core segments, including Printing and Personal Systems, accounted for ~$300.0 billion. HP Inc. aims to drive its revenues by targeting high-growth segments as well as its core businesses.

HP Inc. has also achieved revenue growth in the last six consecutive quarters. Analysts expect its revenue growth to continue in fiscal 2018 and 2019 as well. HP Inc. stock has risen almost 95.0% since the start of 2016. The SPDR S&P 500 ETF Trust (SPY) and the PowerShares QQQ ETF (QQQ) have generated absolute returns of 36.0% and 55.0% since January 2016.

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