It seems the ole “Go West Young Man” mantra of the late 1800’s gold rush days has been replaced by today’s “Go Green Young & Old Company.” Just as the gold miners saw green – as in $$$ — in Gold, corporate America sees that same green in Green.
Hewlett-Packard (HP), which trades on the New York Stock Exchange under the ticker symbol HPQ, announced this week that its initial greening steps will include:
- Installing a 1-megawatt solar array at its San Diego facility
- Buying wind power for its Ireland operations
- Subsidizing employees’ home solar systems
HP’s core business is the manufacture and sale of computer servers and PCs, though it’s also involved in various other technology products and services. It’s one of the biggies ($132 billion market cap*) as well as one of the old-timers (founded in 1939) in Silicon Valley.
There’s been several green initiatives announced by Silicon Valley companies over the past week or so, including those by search engine mammoth Google and semiconductor fabrication equipment manufacturer Applied Materials. Google’s and Applied Material’s stock both trade on the tech-heavy Nasdaq as GOOG and AMAT, respectively.
(Google’s very ambitious green initiatives were recently covered in a piece by Tim Plaehn — click here to read.)
Seems corporate American is realizing that not only does embracing clean energy help the environment, it also helps the bottom-line (likely in two ways: by being a marketing tool to help increase sales to the increasingly green-conscious consumer and by helping to cut energy costs).
Some specifics about HP’s green initiatives:
- Solar array at San Diego facility
California-based solar cell manufacturer SunPower (Nasdaq:SPWR) will install the array, which will provide about 10% of HP’s power needs at this facility. HP estimates the solar system will save it about $750,000 in energy cost over 15 years. SunPower is supplying the solar system to HP at NO UPFRONT COST — my next post will focus on SunPower and its powerful ‘Power Purchase Agreement’ (PPA) Business Model.
- Wind power for Ireland facilities
HP will buy a year’s worth of clean electricity generated by Airtricity’s European wind farms, saving it an estimated $40,000 in 2008. For interested readers, electricity generated by Airtricity’s (love the name — catchy and aptly descriptive) wind farms is fed into Ireland’s national power grid rather than directly to HP facilities. Seems the Emerald Isle will be getting a bit greener.
- Subsidy for employees’ home solar systems
HP and SunPower will each kick-in $2,000 rebates to HP employees who install SunPower’s solar arrays. That $4,000 is on top of the generous state rebate under the California Solar Initiative program.
Some Financial Stats:
- Stock return of 29.7% over the past 1-year period (to Nov. 30) vs the S&P 500’s (a proxy for the overall market) return of 6.0% (CHART at top compares 1-year returns for HP (blue) to competitors IBM, Dell and Microsystems, as well as to the S&P 500 (orange) and Nasdaq (yellow))
- Operating margin of almost 8.4% and profit margin of almost 7.0% — better than industry averages and competitor Dell’s, but not as good as IBM’s
- Return on Equity (ROE) of 19%
- Most recent quarter’s revenue was up over 15% (compared to same quarter of last year) — better than industry averages, Dell’s and IBM’s
- Most recent quarter’s earnings (Net Income) up over 27%
- Profit margins are increasing (earnings increased more than revenue, percentage-wise)
- Trailing (12 mos) P/E (price/earnings) of 19.1 and forward P/E of 13.5. P/E is less than current quarter’s earnings percentage (27) increase, indicating that the stock is not over-valued based upon this one commonly-used valuation measure
- Beta of 1.3 (the stock market as a whole has a beta — measure of risk or stock price fluctuation — of 1, meaning HP’s stock is 30% more volatile than the market. Volatility is not necessarily a bad thing. Case in point: Apple — its beta is 2.2 and it’s had stellar returns over the past few years.
This article is not a recommendation to buy or sell any securities
* “market cap” (market capitalization) = stock price x total number of shares of stock available
