Using an unlevered Free Cash Flow to Firm (FCFF) model, we project HP Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 1.2% to -3.4% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 50, DPO 129, DIO 62). At a 8.7% WACC with mid-year discounting, the terminal value (73% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 12.8x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $59.46 per share, suggesting HPQ is undervalued by 206.0% at the current price of $19.43.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 4,130 | 4,171 | 4,192 | 4,335 | 4,188 | 4,293 |
| (−) Net Interest | 480 | 485 | 488 | 504 | 487 | 499 |
| (+) D&A | 694 | 713 | 691 | 706 | 730 | 748 |
| EBITDA | 5,304 | 5,370 | 5,371 | 5,546 | 5,405 | 5,540 |
| (−) Tax | 418 | 422 | 424 | 439 | 424 | — |
| (−) CapEx | 675 | 682 | 686 | 709 | 685 | — |
| (−) ΔWC | 412 | -5 | -2 | -16 | 17 | — |
| Free Cash Flow (FCF) | 3,799 | 4,270 | 4,264 | 4,414 | 4,280 | — |
| Peers' EBITDA Multiple | 12.8x | |||||
| Terminal Value | 70,862 | |||||
| WACC / Discount Rate | 8.67% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 3,644 | 3,769 | 3,463 | 3,299 | 2,944 | 46,756 |
| Enterprise Value | 63,875 | |||||
| Projection Period | 17,119 | 26.8% | ||||
| Terminal Value | 46,756 | 73.2% | ||||
| (−) Current Net Debt | 7,192 | |||||
| Equity Value | 56,683 | |||||
| (÷) Outstanding Shares | 953M | |||||
| Fair Price | $59 | +206.0% | ||||
| WACC \ EV/EBITDA Exit Multiple | 8.8x | 10.8x | 12.8x | 14.8x | 16.8x |
|---|---|---|---|---|---|
| 6.7% | $48 | $57 | $65 | $73 | $82 |
| 7.7% | $46 | $54 | $62 | $70 | $78 |
| 8.7% | $44 | $52 | $59 | $67 | $75 |
| 9.7% | $42 | $50 | $57 | $64 | $72 |
| 10.7% | $40 | $47 | $54 | $61 | $68 |
Current price: $19.43. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.