Here’s 1 Hewlett-Packard Catalyst You May Have Forgotten

Investors are buying shares of Hewlett-Packard  (NYSE: HPQ  ) following bullish PC guidance from Intel  (NASDAQ: INTC  ) , and rightfully so. Yet, while investors ponder the implications of this news for Hewlett-Packard, 3-D printing is a forgotten, and possibly even bigger, catalyst for HP, which could take shares higher and put more pressure on 3D Systems  (NYSE: DDD  ) .

There's more to HP than PCs
On Friday, HP shares soared over 5% and Intel's increased nearly 7%, after the latter boosted second-quarter revenue guidance by $700 million to $13.7 billion on higher PC demand. This is clearly a good sign for HP, which generates nearly 30% of its business from PCs.

The fact that HP and Intel trade at nine and 14 times forward earnings, respectively, means they're relatively cheap, which serves as a key reason that both shares have soared higher. Moreover, with more than half of Intel's revenue created from PC-related chips, this new-found demand could be a good long-term sign. But, HP investors have seemingly forgotten the company's other segments, specifically printing, which could push shares to a much higher level.

Why is printing so important?
In HP's last quarter, printing revenue declined 4% year over year and accounted for 21% of its $27.3 billion in total revenue. Therefore, it's about equal in size to HP's hardware and services segments, but noticeably smaller than PCs. Yet, perhaps the most telling metric is 42%, which according to the company, is the percentage of operating profit that comes from HP's printing segment.

Source: HP Q2 2014 Earnings Presentation

This means that printing is the company's most valuable asset, although it's losing business by the quarter, and HP is now seeking a method to recreate gains in this segment. According to CEO Meg Whitman, this growth and resurgence could come from 3-D printing. This is based on the announcement earlier this year that HP will enter the 3-D printing market for businesses. HP estimates that worldwide sales of 3-D printers and related software and services will grow from $2.2 billion in 2012 to $11 billion in 2021.

It's important to note that HP is not focusing on the consumer 3D-printing business, but rather the enterprise, which is conveniently driving sales of PCs higher. 3D Systems is perhaps the best illustration of what HP could capture in this market -- a strong presence with other businesses.

In the last 12 months, 3D Systems has generated revenue of $559 million and is expected to grow 39% this year. Its operating margin of 13% is much higher than HP's 7.7% margin, which, along with growth, serves as a key indication for why HP is interested in entering this space.

Moreover, 3-D printing companies like 3D Systems have had to compete with peers of similar size, but never a juggernaut like HP. Thus, HP's move into the space might move its stock in the right direction, but could cause significant headwinds for smaller 3-D printing names.

Albeit, Hewlett-Packard is prepared to enter the 3-D printing space with the largest market share in 2-D printing and a strong ecosystem of clients that use its PCs, hardware, and software. Hence, implementing 3-D printers shouldn't be a difficult task for the company, and with $15 billion in cash on its balance sheet, it's not a risky venture, either.

Foolish thoughts
Due to the margins and growth associated with 3-D printing, it is an arena that could drive HP's stock significantly higher by noticeably increasing the company's bottom line. Despite Hewlett-Packard's 157% stock gains since 2013, shares still trade at just 12 times trailing 12-month earnings, versus a 19 times earnings ratio for the S&P 500.

Hewlett-Packard is priced for long-term gains, and while the return of PC growth is a massive move in the right direction, 3-D printing might be the biggest stock-moving catalyst of the next several years.

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