Despite being in the "wrong" industry, and analysts relatively blasé attitude, HP (NYSE:HPQ) stock has quietly gone about delivering a 35% return in 2016. Combined with its stellar 3.3% dividend yield, HP has been a growth and income investors dream. So, why aren't analysts in HP's corner?

The waning PC market and HP's poor printing division results are the reasons for its consensus price target of a mere $16.27 a share. But there are actually several good reasons HP has delivered so well in 2016, and is likely to continue doing so well into the future.

Image source: HP.

Back to the basics

The current HP could be the poster child for the old adage, "There's more than one way to skin a cat." Unlike many companies in the tech sector, HP doesn't sacrifice its bottom line to buy its way into quarterly revenue growth.

HP delivered significant earnings-per-share (EPS) growth compared to the year-ago third quarter despite a 4% drop in revenue to $11.9 billion. The company accomplished that by shaving nearly $600 million in expenses, and a whopping $3.24 billion year to date. And with its workforce reduction under way, CEO Dion Weisler intends to make HP even leaner and more focused on its core competencies.

The benefits of HP's strict expense management have improved margins -- a full two percentage points higher than 2015's 7.4% after removing one-time items -- which in turn boosted its operating earnings 28% this year to $800 million. The result was a 37% year-over-year improvement in EPS to $0.48. Not bad considering its quarterly revenue decline.

Turning lemons into lemonade

The biggest piece of the HP revenue pie is its PC division, which is performing well above expectations. However, HP's printing unit is another matter, dropping 14% year over year to $4.4 billion. Of HP's highest revenue divisions, supply sales really took a hit last quarter, dropping 18% to $2.84 billion. But help is on the way.

Weisler made it clear with the $1.05 billion deal for Samsung's (NASDAQOTH: SSNLF) printing operations that HP wasn't going to sit idly by as print sales faltered. In addition to one of the industry's top line-up's of multifunction printing (MFP) technology and "more than 6,500 printing patents and a world-class workforce," the deal also includes Samsung's print supplies segment. Samsung doesn't break out print sales, but one pundit's estimate suggests it generated about $1 billion to $1.6 billion last year.

As noted in a recent article, there's also the not-so-small matter of HP's 3D printing opportunity. There are billions of dollars at stake in 3D printing, primarily in the manufacturing sector, which accounted for over $5 billion in sales a year ago. HP's new Fusion 3D printers are just hitting the streets, and according to one analyst some customers have been waiting for the new alternatives before investing in a competitor's device.

How'd they do that?

Contrary to the headlines, the PC market isn't quite dead: at least not for HP. Overall, global PC shipments dropped 5.7% in the calendar third quarter. However, HP's strategy of targeting niche markets such as its virtual reality (VR) ready OMEN notebook helped it drive a 2.3% increase year over year to 14 million units and increase its market share to 20.4%. That's just a whisker behind industry leader Lenovo's 20.9% share.

Mobile PC shipments, which includes HP's notebook line-up, actually increased worldwide last quarter in the "low single-digit" range. But HP's notebook sales climbed 8% in the third quarter to $4.3 billion, making it HP's largest and fastest growing division. In other words, Weisler's efforts to target niche opportunities like gaming have helped HP handily outpace the market, and many investor's expectations.

HP is lean and getting leaner, the Samsung deal and 3D printing should kick-start print sales, and PCs are a surprisingly strong revenue driver. Add it all up and, if growth and income are on your watch list, HP still warrants a good look -- even with its stellar performance in 2016.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.