Dell Inc. (DELL), Hewlett-Packard Company (HPQ): One PC Maker Is Blowing Away the Competition

Hardware manufacturer Hewlett-Packard Company (NYSE:HPQ) pulled a classic beat and raise on Wednesday, but the Personal Systems segment still remains very problematic. Revenue in this segment declined a steep 20%, made worse by an unfavorable comparison with the same period last year. Margins also declined in this division, and results were actually worse than the company expected. In fact, revenue was down in most segments, but the company’s earnings beat of $0.05 and the improved outlook were enough to send shares up a whopping 12% following the report.

Valuations and Metrics

For the kind of growth the company is consistently delivering, Lenovo stock isn’t too expensive at the moment. The stock currently trades at 16.84 times trailing earnings, which is a bit of a premium to the industry, but this seems reasonable for the only PC maker that seems to be growing the business at the moment. The price to sales of 0.29 is also very low, whereas the return on equity of 22.81% is good. The company furthermore only has around $321 million in debt, and nearly $4.5 billion in cash on the balance sheet.

The Bottom Line

In an extremely tough environment for PC makers, with sales down in virtually every geographic region, there is one company that is bucking the trend. Lenovo is consistently delivering excellent growth, outpacing the industry and beating expectations. Despite this fact, the stock is still trading at a reasonable multiple, although slightly above the industry average. With such a strong outperformance, the company seems like a good bet.

The article One PC Maker Is Blowing Away the Competition originally appeared on Fool.com.

Daniel James has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Daniel is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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