Is Hewlett-Packard a Hot Stock?

With shares of Hewlett-Packard (NYSE:HPQ) trading around $33, is HPQ an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Hewlett-Packard provides products, technologies, software, solutions, and services to individual consumers, small and medium businesses, and large enterprises worldwide. The company offers commercial notebooks and desktops, consumer notebooks, desktops, software, and services for the commercial and consumer markets. The services segment provides consulting, outsourcing, and technology services to infrastructure, applications, and business process domains. The diverse technological products and services offered by Hewlett-Packard make it a leading provider that sees increased demand through global expansion.

Hewlett-Packard’s plan to eliminate as many as 16,000 jobs, bringing the total worker cuts up to nearly 50,000, will make the company “more efficient and effective,” CEO Meg Whitman said Friday. The job cuts are part of Whitman’s five-year plan to turn the PC maker around and is the third upward revision to job eliminations since her strategy went into effect two years ago. The pink slips will be spread across the company and will affect all geographic regions, Whitman said. The layoff totals count for between 3 percent and 5 percent of HP’s overall workforce, and they are expected to save HP $1 billion in operating costs by 2016. Whitman said that years of mergers and acquisitions have bloated HP’s headcount. The company bought Compaq in 2002, EDS in 2008, and 17 different software companies over the years. EDS alone had almost 140,000 employees when HP made its offer. “These acquisitions never got integrated quite the way they should have,” said Whitman in an interview on CNBC’s Squawk on the Street. “And there still is pockets, big pockets of inefficiencies.”

Whitman told Re/Code Thursday that this is the last increase to job cuts as part of her restructuring plan. Slimming down the HP workforce will help meet customers demands faster and better, as many buyers find that the company is “a little bit difficult to do business with,” she said. “We need to have speed and agility. We need to be nimble in what is an enormously rapidly changing marketplace,” said Whitman. “So, while no one likes to reduce the workforce, this will be good for our customers and good for Hewlett-Packard.” Investors seem to agree with the chief executive as the stock gained 5.6 percent since the announcement Thursday after market close. That’s the biggest boost in six months — a gain achieved even after reporting an 11th straight quarter of declining sales.