The stock price of HP Inc. (NYSE:HPQ) reached its 52-week high of $36 in May this year, but has since dropped from that level. Further, the stock fell more than 5% in the past week, to $28 currently, largely due to a drop in the broader markets. However, HP reported strong earnings for Q3 2021 (HPQ’s fiscal year ends in October), with revenues rising to $15.3 billion, from $14.3 billion in Q3 2020. COGS came in flat at $11.9 billion, and with other operating expenses rising slower than the rise in revenues, operating income jumped from $779 million to $1.38 billion over this period. Despite a rise in the effective tax rate, EPS jumped from $0.52 in Q3 ’20 to $0.94 in Q3 ’21.
However, after a 5% fall in the past week week, will HP stock continue its downward trajectory over the coming weeks, or is a recovery in the stock imminent? According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price using ten years of historical data, returns for HP stock average 2.5% in the next one-month (twenty-one trading days) period after experiencing a 4% drop over the previous week (five trading days).
But how would these numbers change if you are interested in holding HP stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test HP Inc. stock chances of a rise after a fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just 1 day!
MACHINE LEARNING ENGINE – try it yourself:
IF HP Inc. stock moved by -5% over five trading days, THEN over the next twenty-one trading days HP stock moves an average of 2.5%, with an average 58.3% probability of a positive return over this period.
Some Fun Scenarios, FAQs & Making Sense of HP Inc. Stock Movements:
Question 1: Is the average return for HP stock higher after a drop?
Answer: Consider two situations,
Case 1: HP stock drops by 5% or more in a week
Case 2: HP stock rises by 5% or more in a week
Is the average return for HP stock higher over the subsequent month after Case 1 or Case 2?
HP stock fares better after Case 1, with an average return of 2.5% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 2.1% for Case 2.
In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.
Try the Trefis machine learning engine above to see for yourself how HP stock is likely to behave after any specific gain or loss over a period.
Question 2: Does patience pay?
Answer: If you buy and hold HP stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.
Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!
For HP stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:
You can try the engine to see what this table looks like for HP after a larger loss over the last week, month, or quarter.
Question 3: What about the average return after a rise if you wait for a while?
Answer: The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.
It’s pretty powerful to test the trend for yourself for HP Inc. stock by changing the inputs in the charts above.