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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Sean Collett who wrote (74803)	1/7/2024 1:02:55 PM
From: Harshu Vyas	Read Replies (1) \| Respond to of 78483

ROIC is the best measure for HPQ? Really? Tell me you haven't actually opened up the 10K without telling me... ROIC just doesn't work on a negative equity business. ROE is obviously negative, too. Why is this discussion happening? Maybe ROCE (denominator being total assets minus current liab) would work, but doing that makes little sense, too, given that both business use negative working capital models to their advantage. The most simplistic way of doing this is ROA. But that has obvious flaws, too. REMEMBER, HP have spun off their enterprises business, too, so, really, you're trying to compare apples with pears. It's just silly and there's no need. Maybe, maybe if you can be bothered, separate Dell's enterprise business and work it all out. But what's the point of this exercise? Sometimes these formulas cannot encapsulate a business properly and this is one of those examples. I like Dell's business and management. I'm not wasting my time making silly "return on" formulas to see which company is "better." I suppose if you're trying to work out whether Dell earn their WACC, maybe it's of some use. But that should be obvious. Currently, they do. Whether it continues to is, for you, the analyst to figure out. As for the earnings yield, well, HPQ's earnings have halved in the last two years. Of course it's going to be cheap. That's how tech works. All that should really concern you surrounding Dell is the cash flows. In 2022, they had to pay down their payables balance as business slowed. No longer the case (in fact, the opposite). The cash flows prove that. And on a normalised cash flow basis, Dell is reasonably priced (to me, anyway). Maybe I'm the only person that sees it this way and I'm the greatest fool.