What Percentage of HPQ’s Stock Price Can Be Attributed To Growth?

-35.04%
Downside
29.94
Market
19.45
Trefis
HPQ: Hewlett logo
HPQ
Hewlett

In this analysis, we quantify the percentage of Hewlett-Packard Incorporated’s (NYSE:HPQ) stock that can be attributed to growth.

We know, that a stock’s valuation can be highly influenced by future expectations of earnings growth. However, in theory, if a company sees no growth opportunities it should distribute all its earnings as dividends to its shareholders. Assuming that a company pays all earnings as dividends for the rest of the period, we can calculate Present Value of Growth Opportunity (PVGO) of a stock from the formula given below:

HPQ PVGO

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment / ask questions on the comments section
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our full analysis for Hewlett Packard Incorporated

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