HEWLETT PACKARD ENTERPRISE (HPE) Stock Fundamental Analysis
NYSE:HPE - US42824C1099 - Common Stock
22.45 USD
+0.63 (+2.89%)
22.41 USD
-0.04 (-0.18%)
Taking everything into account, HPE scores 4 out of 10 in our fundamental rating. HPE was compared to 32 industry peers in the Technology Hardware, Storage & Peripherals industry. There are concerns on the financial health of HPE while its profitability can be described as average. HPE has a decent growth rate and is not valued too expensively.
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.
Each year in the past 5 years HPE had a positive operating cash flow.
1.2 Ratios
HPE has a better Return On Assets (2.02%) than 62.50% of its industry peers.
With a decent Return On Equity value of 5.75%, HPE is doing good in the industry, outperforming 75.00% of the companies in the same industry.
HPE has a Return On Invested Capital of 4.54%. This is comparable to the rest of the industry: HPE outperforms 59.38% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for HPE is significantly below the industry average of 15.13%.
| 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
HPE has a better Profit Margin (4.34%) than 68.75% of its industry peers.
In the last couple of years the Profit Margin of HPE has grown nicely.
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.
HPE has a Gross Margin (30.05%) which is in line with its industry peers.
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 1.04, we must say that HPE is in the distress zone and has some risk of bankruptcy.
HPE has a Altman-Z score of 1.04. This is comparable to the rest of the industry: HPE outperforms 40.63% of its industry peers.
The Debt to FCF ratio of HPE is 163.83, which is on the high side as it means it would take HPE, 163.83 years of fcf income to pay off 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.
HPE has a Debt/Equity ratio of 0.52. This is a neutral value indicating HPE is somewhat dependend on debt financing.
The Debt to Equity ratio of HPE (0.52) is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.52 | ||
| Debt/FCF | 163.83 | ||
| Altman-Z | 1.04 |
ROIC/WACC0.61
WACC7.4%
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.
The Current ratio of HPE (1.29) is comparable to the rest of the industry.
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.
Looking at the Quick ratio, with a value of 0.96, HPE is in line with its industry, outperforming 56.25% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.29 | ||
| Quick Ratio | 0.96 |
3. Growth
3.1 Past
HPE shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 2.09%.
HPE shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 2.15% yearly.
HPE shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 11.79%.
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
The Earnings Per Share is expected to grow by 5.81% on average over the next years.
HPE is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 6.77% yearly.
EPS Next Y-5.47%
EPS Next 2Y5.97%
EPS Next 3Y9.02%
EPS Next 5Y5.81%
Revenue Next Year12.42%
Revenue Next 2Y11.41%
Revenue Next 3Y9.42%
Revenue Next 5Y6.77%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
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
A Price/Earnings ratio of 11.51 indicates a reasonable valuation of HPE.
Compared to the rest of the industry, the Price/Earnings ratio of HPE indicates a rather cheap valuation: HPE is cheaper than 93.75% of the companies listed in the same industry.
The average S&P500 Price/Earnings ratio is at 27.24. HPE is valued rather cheaply when compared to this.
Based on the Price/Forward Earnings ratio of 10.10, the valuation of HPE can be described as reasonable.
Based on the Price/Forward Earnings ratio, HPE is valued a bit cheaper than 78.13% of the companies in the same industry.
HPE is valuated cheaply when we compare the Price/Forward Earnings ratio to 22.81, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.51 | ||
| Fwd PE | 10.1 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, HPE is valued cheaper than 90.63% of the companies in the same industry.
HPE's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 275.32 | ||
| EV/EBITDA | 7.6 |
4.3 Compensation for Growth
PEG (NY)N/A
PEG (5Y)5.35
EPS Next 2Y5.97%
EPS Next 3Y9.02%
5. Dividend
5.1 Amount
HPE has a Yearly Dividend Yield of 2.38%. Purely for dividend investing, there may be better candidates out there.
HPE's Dividend Yield is rather good when compared to the industry average which is at 1.93. HPE pays more dividend than 93.75% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.34, HPE has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.38% |
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.
HPE has not decreased its dividend in the past 5 years, so it has a somewhat stable track record.
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.
The dividend of HPE is growing, but earnings are growing more, so the dividend growth is sustainable.
DP53.5%
EPS Next 2Y5.97%
EPS Next 3Y9.02%
22.45
+0.63 (+2.89%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryTechnology Hardware, Storage & Peripherals
Earnings (Last)
Earnings (Next)
Inst Owners91.51%
Inst Owner Change-1.35%
Ins Owners0.4%
Ins Owner Change3.24%
Market Cap29.46B
Analysts76
Price Target23.75 (5.79%)
Short Float %3.89%
Short Ratio2.92
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.38% |
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)6.16%
PT rev (3m)29.02%
EPS NQ rev (1m)-0.05%
EPS NQ rev (3m)2.9%
EPS NY rev (1m)3.68%
EPS NY rev (3m)3.63%
Revenue NQ rev (1m)-0.44%
Revenue NQ rev (3m)4.94%
Revenue NY rev (1m)1.12%
Revenue NY rev (3m)3.71%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.51 | ||
| Fwd PE | 10.1 | ||
| P/S | 0.93 | ||
| P/FCF | 275.32 | ||
| P/OCF | 12.63 | ||
| P/B | 1.23 | ||
| P/tB | 4.44 | ||
| EV/EBITDA | 7.6 |
EPS(TTM)1.95
EY8.69%
EPS(NY)2.22
Fwd EY9.9%
FCF(TTM)0.08
FCFY0.36%
OCF(TTM)1.78
OCFY7.92%
SpS24.12
BVpS18.19
TBVpS5.05
PEG (NY)N/A
PEG (5Y)5.35
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 | 1.04 |
F-Score4
WACC7.4%
ROIC/WACC0.61
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-5.47%
EPS Next 2Y5.97%
EPS Next 3Y9.02%
EPS Next 5Y5.81%
Revenue 1Y (TTM)11.79%
Revenue growth 3Y2.74%
Revenue growth 5Y0.67%
Sales Q2Q%5.87%
Revenue Next Year12.42%
Revenue Next 2Y11.41%
Revenue Next 3Y9.42%
Revenue Next 5Y6.77%
EBIT growth 1Y-0.76%
EBIT growth 3Y5.66%
EBIT growth 5Y0.14%
EBIT Next Year71.21%
EBIT Next 3Y29.44%
EBIT Next 5Y17.11%
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%