Analyzing HP (HPQ) and EMC (EMC)
HP (NYSE: HPQ) and EMC (NYSE:EMC) are both computer and technology companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, profitability, earnings, dividends, valuation, risk and analyst recommendations.
Volatility & Risk
HP has a beta of 1.9, suggesting that its share price is 90% more volatile than the S&P 500. Comparatively, EMC has a beta of 1.33, suggesting that its share price is 33% more volatile than the S&P 500.
This is a summary of recent ratings and price targets for HP and EMC, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
HP presently has a consensus target price of $20.53, suggesting a potential upside of 6.29%. Given HP’s stronger consensus rating and higher possible upside, equities research analysts clearly believe HP is more favorable than EMC.
Insider & Institutional Ownership
78.5% of HP shares are held by institutional investors. Comparatively, 79.9% of EMC shares are held by institutional investors. 0.6% of HP shares are held by company insiders. Comparatively, 0.4% of EMC shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
This table compares HP and EMC’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
HP pays an annual dividend of $0.53 per share and has a dividend yield of 2.7%. EMC pays an annual dividend of $0.46 per share and has a dividend yield of 1.6%. HP pays out 38.4% of its earnings in the form of a dividend. EMC pays out 43.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. EMC has raised its dividend for 3 consecutive years. HP is clearly the better dividend stock, given its higher yield and lower payout ratio.
Earnings and Valuation
This table compares HP and EMC’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|HP||$50.64 billion||0.64||$4.20 billion||$1.38||13.99|
HP has higher revenue and earnings than EMC. HP is trading at a lower price-to-earnings ratio than EMC, indicating that it is currently the more affordable of the two stocks.
HP beats EMC on 10 of the 14 factors compared between the two stocks.
HP Inc. is a provider of products, technologies, software, solutions and services to individual consumers, small- and medium-sized businesses, and enterprises, including customers in the government, health and education sectors. The Company provides personal computing and other access devices, imaging and printing products, and related technologies, solutions and services. Its segments include Personal Systems, Printing and Corporate Investments. The Personal Systems segment provides Commercial personal computers (PCs), Consumer PCs, workstations, thin clients, Commercial tablets and mobility devices, retail point-of-sale systems, displays and other accessories, software, support and services for the commercial and consumer markets. The Printing segment provides consumer and commercial printer hardware, supplies, media, solutions and services, as well as scanning devices. The Corporate Investments segment includes the operations of HP Labs and certain business incubation projects.
EMC Corporation (EMC) develops, delivers and supports the information technology (IT) industry’s range of information infrastructure and virtual infrastructure technologies, solutions and services. EMC manages the Company as part of a federation of businesses: EMC Information Infrastructure, VMware Virtual Infrastructure, Pivotal and Virtustream. EMC’s Information Infrastructure business provides a foundation for organizations to store, manage, protect, analyze and secure information. EMC’s VMware Virtual Infrastructure business is engaged in virtualization and cloud infrastructure solutions that enable businesses to help transform the way they build, deliver and consume IT resources in a manner that is based on their specific needs. EMC’s Pivotal business unites strategic technology, people and programs from EMC and VMware and has a platform that consists of data, agile development practices and a cloud independent platform-as-a-service.
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