HEWLETT PACKARD ENTERPRISE (HPE) Stock Fundamental Analysis
NYSE:HPE - New York Stock Exchange, Inc. - US42824C1099 - Common Stock - Currency: USD
We assign a fundamental rating of 4 out of 10 to HPE. HPE was compared to 32 industry peers in the Technology Hardware, Storage & Peripherals industry. HPE has a medium profitability rating, but doesn't score so well on its financial health evaluation. HPE is not valued too expensively and it also shows a decent growth rate. Finally HPE also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
HPE had positive earnings in the past year.
HPE had a positive operating cash flow in the past year.
Of the past 5 years HPE 4 years were profitable.
HPE had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
HPE's Return On Assets of 2.02% is in line compared to the rest of the industry. HPE outperforms 59.38% of its industry peers.
HPE has a better Return On Equity (5.75%) than 75.00% of its industry peers.
HPE has a Return On Invested Capital (4.54%) which is comparable to the rest of the industry.
Measured over the past 3 years, the Average Return On Invested Capital for HPE is significantly below the industry average of 16.42%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.02% | ||
| ROE | 5.75% | ||
| ROIC | 4.54% |
ROA(3y)2.88%
ROA(5y)2.8%
ROE(3y)8.07%
ROE(5y)7.88%
ROIC(3y)5.52%
ROIC(5y)5.09%
1.3 Margins
With a decent Profit Margin value of 4.34%, HPE is doing good in the industry, outperforming 71.88% of the companies in the same industry.
HPE's Profit Margin has improved in the last couple of years.
HPE has a Operating Margin (6.98%) which is in line with its industry peers.
In the last couple of years the Operating Margin of HPE has remained more or less at the same level.
Looking at the Gross Margin, with a value of 30.05%, HPE is in line with its industry, outperforming 46.88% of the companies in the same industry.
HPE's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 6.98% | ||
| PM (TTM) | 4.34% | ||
| GM | 30.05% |
OM growth 3Y2.85%
OM growth 5Y-0.53%
PM growth 3Y-11.75%
PM growth 5Y18.68%
GM growth 3Y-0.96%
GM growth 5Y0.13%
2. Health
2.1 Basic Checks
HPE has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
The number of shares outstanding for HPE has been increased compared to 1 year ago.
The number of shares outstanding for HPE has been increased compared to 5 years ago.
The debt/assets ratio for HPE is higher compared to a year ago.
2.2 Solvency
Based on the Altman-Z score of 0.97, we must say that HPE is in the distress zone and has some risk of bankruptcy.
Looking at the Altman-Z score, with a value of 0.97, HPE is doing worse than 62.50% of the companies in the same industry.
HPE has a debt to FCF ratio of 163.83. This is a negative value and a sign of low solvency as HPE would need 163.83 years to pay back of all of its debts.
HPE has a Debt to FCF ratio of 163.83. This is comparable to the rest of the industry: HPE outperforms 46.88% of its industry peers.
A Debt/Equity ratio of 0.52 indicates that HPE is somewhat dependend on debt financing.
HPE has a Debt to Equity ratio (0.52) which is in line with its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.52 | ||
| Debt/FCF | 163.83 | ||
| Altman-Z | 0.97 |
ROIC/WACC0.62
WACC7.33%
2.3 Liquidity
HPE has a Current Ratio of 1.29. This is a normal value and indicates that HPE is financially healthy and should not expect problems in meeting its short term obligations.
HPE has a Current ratio of 1.29. This is in the lower half of the industry: HPE underperforms 62.50% of its industry peers.
HPE has a Quick Ratio of 1.29. This is a bad value and indicates that HPE is not financially healthy enough and could expect problems in meeting its short term obligations.
HPE has a Quick ratio (0.96) which is in line with its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.29 | ||
| Quick Ratio | 0.96 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 2.09% over the past year.
HPE shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 2.15% yearly.
The Revenue has grown by 11.79% in the past year. This is quite good.
Measured over the past years, HPE shows a small growth in Revenue. The Revenue has been growing by 0.67% on average per year.
EPS 1Y (TTM)2.09%
EPS 3Y0.17%
EPS 5Y2.15%
EPS Q2Q%-9.52%
Revenue 1Y (TTM)11.79%
Revenue growth 3Y2.74%
Revenue growth 5Y0.67%
Sales Q2Q%5.87%
3.2 Future
HPE is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 3.87% yearly.
The Revenue is expected to grow by 5.51% on average over the next years.
EPS Next Y-8.78%
EPS Next 2Y2.12%
EPS Next 3Y6.25%
EPS Next 5Y3.87%
Revenue Next Year8.43%
Revenue Next 2Y6.92%
Revenue Next 3Y5.77%
Revenue Next 5Y5.51%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
HPE is valuated reasonably with a Price/Earnings ratio of 9.41.
Based on the Price/Earnings ratio, HPE is valued cheaply inside the industry as 87.50% of the companies are valued more expensively.
The average S&P500 Price/Earnings ratio is at 26.59. HPE is valued rather cheaply when compared to this.
Based on the Price/Forward Earnings ratio of 8.88, the valuation of HPE can be described as reasonable.
75.00% of the companies in the same industry are more expensive than HPE, based on the Price/Forward Earnings ratio.
HPE's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 22.39.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.41 | ||
| Fwd PE | 8.88 |
4.2 Price Multiples
HPE's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. HPE is cheaper than 93.75% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of HPE is on the same level as its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 225.15 | ||
| EV/EBITDA | 6.44 |
4.3 Compensation for Growth
PEG (NY)N/A
PEG (5Y)4.37
EPS Next 2Y2.12%
EPS Next 3Y6.25%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.87%, HPE has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 2.04, HPE pays a better dividend. On top of this HPE pays more dividend than 96.88% of the companies listed in the same industry.
HPE's Dividend Yield is a higher than the S&P500 average which is at 2.39.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.87% |
5.2 History
The dividend of HPE has a limited annual growth rate of 3.20%.
HPE has paid a dividend for at least 10 years, which is a reliable track record.
As HPE did not decrease their dividend in the past 5 years, we can say the dividend looks stable.
Dividend Growth(5Y)3.2%
Div Incr Years2
Div Non Decr Years9
5.3 Sustainability
HPE pays out 53.50% of its income as dividend. This is a bit on the high side, but may be sustainable.
HPE's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP53.5%
EPS Next 2Y2.12%
EPS Next 3Y6.25%
18.34
+0.03 (+0.16%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryTechnology Hardware, Storage & Peripherals
Earnings (Last)
Earnings (Next)
Inst Owners85.61%
Inst Owner Change8.41%
Ins Owners0.4%
Ins Owner Change-6.43%
Market Cap24.09B
Analysts75.79
Price Target19.43 (5.94%)
Short Float %5.3%
Short Ratio3.34
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.87% |
Yearly Dividend0.52
Dividend Growth(5Y)3.2%
DP53.5%
Div Incr Years2
Div Non Decr Years9
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)7.04%
Min EPS beat(2)-1.9%
Max EPS beat(2)15.97%
EPS beat(4)3
Avg EPS beat(4)5.7%
Min EPS beat(4)-1.9%
Max EPS beat(4)15.97%
EPS beat(8)7
Avg EPS beat(8)5.15%
EPS beat(12)10
Avg EPS beat(12)5.28%
EPS beat(16)13
Avg EPS beat(16)5.62%
Revenue beat(2)1
Avg Revenue beat(2)0.46%
Min Revenue beat(2)-0.51%
Max Revenue beat(2)1.42%
Revenue beat(4)2
Avg Revenue beat(4)0.46%
Min Revenue beat(4)-0.52%
Max Revenue beat(4)1.45%
Revenue beat(8)3
Avg Revenue beat(8)-0.18%
Revenue beat(12)5
Avg Revenue beat(12)0.07%
Revenue beat(16)5
Avg Revenue beat(16)-0.37%
PT rev (1m)5.54%
PT rev (3m)-21.62%
EPS NQ rev (1m)1.01%
EPS NQ rev (3m)-21.47%
EPS NY rev (1m)-0.15%
EPS NY rev (3m)-15.96%
Revenue NQ rev (1m)2.23%
Revenue NQ rev (3m)1.43%
Revenue NY rev (1m)0.02%
Revenue NY rev (3m)-0.23%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.41 | ||
| Fwd PE | 8.88 | ||
| P/S | 0.76 | ||
| P/FCF | 225.15 | ||
| P/OCF | 10.33 | ||
| P/B | 1.01 | ||
| P/tB | 3.63 | ||
| EV/EBITDA | 6.44 |
EPS(TTM)1.95
EY10.63%
EPS(NY)2.06
Fwd EY11.26%
FCF(TTM)0.08
FCFY0.44%
OCF(TTM)1.78
OCFY9.68%
SpS24.09
BVpS18.17
TBVpS5.05
PEG (NY)N/A
PEG (5Y)4.37
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.02% | ||
| ROE | 5.75% | ||
| ROCE | 5.1% | ||
| ROIC | 4.54% | ||
| ROICexc | 6.22% | ||
| ROICexgc | 13.66% | ||
| OM | 6.98% | ||
| PM (TTM) | 4.34% | ||
| GM | 30.05% | ||
| FCFM | 0.34% |
ROA(3y)2.88%
ROA(5y)2.8%
ROE(3y)8.07%
ROE(5y)7.88%
ROIC(3y)5.52%
ROIC(5y)5.09%
ROICexc(3y)6.82%
ROICexc(5y)6.08%
ROICexgc(3y)16.7%
ROICexgc(5y)14.78%
ROCE(3y)6.33%
ROCE(5y)5.84%
ROICexcg growth 3Y10.99%
ROICexcg growth 5Y-3.59%
ROICexc growth 3Y8.67%
ROICexc growth 5Y-0.74%
OM growth 3Y2.85%
OM growth 5Y-0.53%
PM growth 3Y-11.75%
PM growth 5Y18.68%
GM growth 3Y-0.96%
GM growth 5Y0.13%
F-Score4
Asset Turnover0.47
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.52 | ||
| Debt/FCF | 163.83 | ||
| Debt/EBITDA | 2.66 | ||
| Cap/Depr | 91.3% | ||
| Cap/Sales | 7.03% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 50.19% | ||
| Profit Quality | 7.8% | ||
| Current Ratio | 1.29 | ||
| Quick Ratio | 0.96 | ||
| Altman-Z | 0.97 |
F-Score4
WACC7.33%
ROIC/WACC0.62
Cap/Depr(3y)108.77%
Cap/Depr(5y)102.69%
Cap/Sales(3y)9.51%
Cap/Sales(5y)9.27%
Profit Quality(3y)108.59%
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)2.09%
EPS 3Y0.17%
EPS 5Y2.15%
EPS Q2Q%-9.52%
EPS Next Y-8.78%
EPS Next 2Y2.12%
EPS Next 3Y6.25%
EPS Next 5Y3.87%
Revenue 1Y (TTM)11.79%
Revenue growth 3Y2.74%
Revenue growth 5Y0.67%
Sales Q2Q%5.87%
Revenue Next Year8.43%
Revenue Next 2Y6.92%
Revenue Next 3Y5.77%
Revenue Next 5Y5.51%
EBIT growth 1Y-0.76%
EBIT growth 3Y5.66%
EBIT growth 5Y0.14%
EBIT Next Year67.25%
EBIT Next 3Y27.85%
EBIT Next 5Y23.39%
FCF growth 1Y-90.23%
FCF growth 3Y-16.32%
FCF growth 5Y11.59%
OCF growth 1Y-46.37%
OCF growth 3Y-9.57%
OCF growth 5Y1.66%