Apple (NASDAQ: AAPL) and HP (NYSE:HPQ) are both large-cap computer hardware – nec companies, but which is the superior investment? We will contrast the two businesses based on the strength of their profitability, valuation, dividends, earnings, risk, analyst recommendations and institutional ownership.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Apple and HP, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Apple 0 6 41 0 2.87
HP 0 9 12 0 2.57

Apple currently has a consensus target price of $201.52, suggesting a potential upside of 18.44%. HP has a consensus target price of $21.58, suggesting a potential downside of 0.80%. Given Apple’s stronger consensus rating and higher probable upside, research analysts clearly believe Apple is more favorable than HP.

Valuation & Earnings

This table compares Apple and HP’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Apple $229.23 billion 3.81 $48.35 billion $9.19 18.51
HP $48.24 billion 0.75 $2.50 billion $1.39 15.65

Apple has higher revenue and earnings than HP. HP is trading at a lower price-to-earnings ratio than Apple, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Apple and HP’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Apple 21.09% 36.29% 13.95%
HP 4.66% -64.93% 9.10%

Risk and Volatility

Apple has a beta of 1.25, suggesting that its share price is 25% more volatile than the S&P 500. Comparatively, HP has a beta of 1.84, suggesting that its share price is 84% more volatile than the S&P 500.

Insider and Institutional Ownership

60.4% of Apple shares are owned by institutional investors. Comparatively, 79.6% of HP shares are owned by institutional investors. 0.1% of Apple shares are owned by insiders. Comparatively, 0.6% of HP shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Dividends

Apple pays an annual dividend of $2.52 per share and has a dividend yield of 1.5%. HP pays an annual dividend of $0.53 per share and has a dividend yield of 2.4%. Apple pays out 27.4% of its earnings in the form of a dividend. HP pays out 38.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Apple has raised its dividend for 4 consecutive years.

Summary

Apple beats HP on 13 of the 17 factors compared between the two stocks.

Apple Company Profile

Apple Inc. (Apple) designs, manufactures and markets mobile communication and media devices, personal computers, and portable digital music players, and a variety of related software, services, peripherals, networking solutions, and third-party digital content and applications. The Company’s products and services include iPhone, iPad, Mac, iPod, Apple TV, a portfolio of consumer and professional software applications, the iOS and OS X operating systems, iCloud, and a variety of accessory, service and support offerings. The Company also delivers digital content and applications through the iTunes Store, App StoreSM, iBookstoreSM, and Mac App Store. The Company distributes its products worldwide through its retail stores, online stores, and direct sales force, as well as through third-party cellular network carriers, wholesalers, retailers, and value-added resellers. In February 2012, the Company acquired app-search engine Chomp.

HP Company Profile

HP Inc. is a provider of products, technologies, software, solutions and services to individual consumers, small- and medium-sized businesses, and enterprises, including customers in the government, health and education sectors. The Company provides personal computing and other access devices, imaging and printing products, and related technologies, solutions and services. Its segments include Personal Systems, Printing and Corporate Investments. The Personal Systems segment provides Commercial personal computers (PCs), Consumer PCs, workstations, thin clients, Commercial tablets and mobility devices, retail point-of-sale systems, displays and other accessories, software, support and services for the commercial and consumer markets. The Printing segment provides consumer and commercial printer hardware, supplies, media, solutions and services, as well as scanning devices. The Corporate Investments segment includes the operations of HP Labs and certain business incubation projects.

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