Head-To-Head Analysis: HP (NYSE:HPQ) and Lenovo Group (OTCMKTS:LNVGY)

HP (NYSE:HPQ) and Lenovo Group (OTCMKTS:LNVGY) are both large-cap computer and technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, institutional ownership, earnings, dividends, risk and analyst recommendations.

Dividends

HP pays an annual dividend of $1.16 per share and has a dividend yield of 4.7%. Lenovo Group pays an annual dividend of $0.40 per share and has a dividend yield of 1.7%. HP pays out 44.8% of its earnings in the form of a dividend. Lenovo Group pays out 18.6% 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. HP has increased its dividend for 15 consecutive years. HP is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

77.5% of HP shares are owned by institutional investors. Comparatively, 0.1% of Lenovo Group shares are owned by institutional investors. 0.4% of HP shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares HP and Lenovo Group”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
HP	$53.56 billion	0.43	$2.78 billion	$2.59	9.55
Lenovo Group	$69.08 billion	0.22	$1.38 billion	$2.15	11.18

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

Risk & Volatility

HP has a beta of 1.3, meaning that its stock price is 30% more volatile than the S&P 500. Comparatively, Lenovo Group has a beta of 0.77, meaning that its stock price is 23% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for HP and Lenovo Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
HP	1	12	2	0	2.07
Lenovo Group	0	0	0	0	0.00

HP currently has a consensus price target of $29.54, indicating a potential upside of 19.44%. Given HP’s stronger consensus rating and higher probable upside, analysts plainly believe HP is more favorable than Lenovo Group.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
HP	4.64%	-244.99%	7.97%
Lenovo Group	2.00%	25.20%	3.62%

Summary

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

About HP

HP Inc. provides products, technologies, software, solutions, and services to individual consumers, small- and medium-sized businesses, and large enterprises, including customers in the government, health, and education sectors worldwide. It operates through Personal Systems and Printing segments. The Personal Systems segment offers commercial personal computers (PCs), consumer PCs, workstations, thin clients, commercial tablets and mobility devices, retail point-of-sale systems, displays and other related 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; and laserJet and enterprise, inkjet and printing, graphics, and 3D printing solutions. The company was formerly known as Hewlett-Packard Company and changed its name to HP Inc. in October 2015. HP Inc. was founded in 1939 and is headquartered in Palo Alto, California.

About Lenovo Group

Lenovo Group Limited, an investment holding company, develops, manufactures, and markets technology products and services. It operates through Intelligent Devices Group, Infrastructure Solutions Group, and Solutions and Services Group segments. The company offers commercial and consumer personal computers, as well as servers and workstations; and a family of mobile Internet devices, including tablets and smartphones. In addition, it provides laptops, monitors, accessories, smart home and collaboration solutions, augmented and virtual reality, commercial internet of things, and smart infrastructure data center solutions. Further, the company manufactures and distributes IT products, computers, computer hardware, and peripheral equipment; and offers IT, business planning, management, supply chain, finance, administration support, procurement agency, data management, intellectual property, and investment management services. Additionally, it is involved in the retail and service business for consumer electronic products and related digital services; development, ownership, licensing, and sale of communications hardware and software; and develops software and applications. Furthermore, the company distributes smartphone, tablet, server, and storage. It operates in China, the Asia Pacific, Europe, the Middle East, Africa, and the Americas. Lenovo Group Limited was founded in 1984 and is headquartered in Quarry Bay, Hong Kong.