Tech is everywhere. It needs to be here.
I'm typing today's column on a Logitech
But the wife has been asking me to purchase one of their laptops, and I must admit -- after reading last night's earnings report, not only am I going to tell her "yes," but I might also buy a few HP shares as well.
Pull your cassettes out of storage and cue up the Robert Palmer soundtrack. In Monday's Foolish Forecast, I painted HP as a steadily improving company showing no signs of slowing down. Yesterday's news confirmed this. In fiscal Q3 2008, HP triumphed in every manner imaginable:
- Sales grew 10% to $28 billion year over year, headlined by double-digit expansion in the Europe, Middle East, and Africa (EMEA) and Asia Pacific regions; Brazil, Russia, India, and China (BRIC) growth in particular exploded 24% upward.
- Operating margins tacked on about 70 basis points.
- Between those two factors, profits soared 21% to $0.80 per share; $0.86 non-GAAP.
And this was just the beginning. HP also did a masterful job of managing its working capital, holding inventories to just 2% growth, and more than doubling free cash flow to $2.7 billion.
Resistance is futile
Fools, this was about as close to a perfect earnings report as any I've read. The only apparent flaw was HP's buyback program. The company spent $1.6 billion to buy back 34 million shares in Q3. That works out to $47.06 per stub -- for shares worth less than $46 today.
At first glance, it doesn't look like a smart way to spend cash. But here's the thing: HP is smarter than the investors who ditched its stock on news of the EDS
I've been saying for months that HP was cheap. It still is. The company generated $12.1 billion in free cash flow over the past 12 months, meaning it sells for less than 9 times FCF today. You don't need Apple's
Consistent performance plus a compelling price makes Hewlett-Packard an irresistible bargain.
Fool contributor Rich Smith does not own shares of any company named above. Both Microsoft and Dell are Motley Fool Inside Value selections. Apple is a Motley Fool Stock Advisor pick. Explore the portfolio-boosting goodness of any of the Fool's newsletters free for 30 days. Get your free refresher course in The Motley Fool's disclosure policy right here.
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