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 5 out of 10 to HPE. HPE was compared to 32 industry peers in the Technology Hardware, Storage & Peripherals industry. While HPE is still in line with the averages on profitability rating, there are concerns on its financial health. HPE scores decently on growth, while it is valued quite cheap. This could make an interesting combination. HPE also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
In the past year HPE was profitable.
In the past year HPE had a positive cash flow from operations.
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
The Return On Assets of HPE (3.93%) is better than 68.75% of its industry peers.
With a decent Return On Equity value of 10.96%, HPE is doing good in the industry, outperforming 78.13% of the companies in the same industry.
HPE has a Return On Invested Capital of 4.66%. This is in the better half of the industry: HPE outperforms 62.50% 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 16.87%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.93% | ||
| ROE | 10.96% | ||
| ROIC | 4.66% |
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 Profit Margin of 8.85%. This is amongst the best in the industry. HPE outperforms 81.25% of its industry peers.
HPE's Profit Margin has improved in the last couple of years.
HPE's Operating Margin of 7.75% is fine compared to the rest of the industry. HPE outperforms 68.75% of its industry peers.
HPE's Operating Margin has been stable in the last couple of years.
HPE has a Gross Margin (31.12%) which is comparable to the rest of the industry.
HPE's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 7.75% | ||
| PM (TTM) | 8.85% | ||
| GM | 31.12% |
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.
HPE has more shares outstanding than it did 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 10.85. This is a negative value and a sign of low solvency as HPE would need 10.85 years to pay back of all of its debts.
HPE has a Debt to FCF ratio (10.85) which is in line with its industry peers.
A Debt/Equity ratio of 0.56 indicates that HPE is somewhat dependend on debt financing.
HPE has a Debt to Equity ratio of 0.56. This is comparable to the rest of the industry: HPE outperforms 50.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.56 | ||
| Debt/FCF | 10.85 | ||
| Altman-Z | 0.97 |
ROIC/WACC0.64
WACC7.27%
2.3 Liquidity
A Current Ratio of 1.33 indicates that HPE should not have too much problems paying its short term obligations.
HPE has a Current ratio of 1.33. This is comparable to the rest of the industry: HPE outperforms 40.63% of its industry peers.
A Quick Ratio of 0.98 indicates that HPE may have some problems paying its short term obligations.
HPE's Quick ratio of 0.98 is in line compared to the rest of the industry. HPE outperforms 59.38% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.33 | ||
| Quick Ratio | 0.98 |
3. Growth
3.1 Past
The earnings per share for HPE have decreased by -1.00% in the last year.
Measured over the past 5 years, HPE shows a small growth in Earnings Per Share. The EPS has been growing by 2.15% on average per year.
HPE shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 11.20%.
The Revenue has been growing slightly by 0.67% on average over the past years.
EPS 1Y (TTM)-1%
EPS 3Y0.17%
EPS 5Y2.15%
EPS Q2Q%2.08%
Revenue 1Y (TTM)11.2%
Revenue growth 3Y2.74%
Revenue growth 5Y0.67%
Sales Q2Q%16.27%
3.2 Future
The Earnings Per Share is expected to grow by 3.87% 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 5.51% yearly.
EPS Next Y-8.78%
EPS Next 2Y2.12%
EPS Next 3Y6.25%
EPS Next 5Y3.87%
Revenue Next Year8.41%
Revenue Next 2Y6.91%
Revenue Next 3Y5.77%
Revenue Next 5Y5.51%
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
The Price/Earnings ratio is 8.90, which indicates a very decent valuation of HPE.
87.50% of the companies in the same industry are more expensive than HPE, based on the Price/Earnings ratio.
HPE's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 26.60.
The Price/Forward Earnings ratio is 8.58, which indicates a very decent valuation of HPE.
Based on the Price/Forward Earnings ratio, HPE is valued a bit cheaper than 75.00% of the companies in the same industry.
HPE's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 22.43.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 8.9 | ||
| Fwd PE | 8.58 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, HPE is valued cheaply inside the industry as 100.00% of the companies are valued more expensively.
Based on the Price/Free Cash Flow ratio, HPE is valued cheaply inside the industry as 81.25% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 14.12 | ||
| EV/EBITDA | 5.4 |
4.3 Compensation for Growth
HPE has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)4.14
EPS Next 2Y2.12%
EPS Next 3Y6.25%
5. Dividend
5.1 Amount
HPE has a Yearly Dividend Yield of 2.95%.
Compared to an average industry Dividend Yield of 2.74, HPE pays a better dividend. On top of this HPE pays more dividend than 93.75% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.36, HPE pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.95% |
5.2 History
The dividend of HPE has a limited annual growth rate of 3.20%.
HPE has been paying a dividend for at least 10 years, so it has 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 Years1
Div Non Decr Years8
5.3 Sustainability
HPE pays out 25.42% of its income as dividend. This is a sustainable payout ratio.
The dividend of HPE is growing, but earnings are growing more, so the dividend growth is sustainable.
DP25.42%
EPS Next 2Y2.12%
EPS Next 3Y6.25%
17.72
+0.26 (+1.49%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryTechnology Hardware, Storage & Peripherals
Earnings (Last)
Earnings (Next)
Inst Owners85.61%
Inst Owner Change8.15%
Ins Owners0.4%
Ins Owner Change14.62%
Market Cap23.28B
Analysts74.74
Price Target18.41 (3.89%)
Short Float %5.83%
Short Ratio3.17
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.95% |
Yearly Dividend0.52
Dividend Growth(5Y)3.2%
DP25.42%
Div Incr Years1
Div Non Decr Years8
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)0.51%
Min EPS beat(2)-1.9%
Max EPS beat(2)2.93%
EPS beat(4)3
Avg EPS beat(4)3.44%
Min EPS beat(4)-1.9%
Max EPS beat(4)6.92%
EPS beat(8)7
Avg EPS beat(8)3.94%
EPS beat(12)9
Avg EPS beat(12)3.64%
EPS beat(16)13
Avg EPS beat(16)5.14%
Revenue beat(2)1
Avg Revenue beat(2)0.47%
Min Revenue beat(2)-0.51%
Max Revenue beat(2)1.45%
Revenue beat(4)2
Avg Revenue beat(4)1.24%
Min Revenue beat(4)-0.52%
Max Revenue beat(4)4.54%
Revenue beat(8)2
Avg Revenue beat(8)-1.05%
Revenue beat(12)4
Avg Revenue beat(12)-0.22%
Revenue beat(16)5
Avg Revenue beat(16)-0.45%
PT rev (1m)-8.75%
PT rev (3m)-26.17%
EPS NQ rev (1m)-0.26%
EPS NQ rev (3m)-35.9%
EPS NY rev (1m)-0.15%
EPS NY rev (3m)-15.89%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-5.74%
Revenue NY rev (1m)0.07%
Revenue NY rev (3m)-0.21%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 8.9 | ||
| Fwd PE | 8.58 | ||
| P/S | 0.75 | ||
| P/FCF | 14.12 | ||
| P/OCF | 5.99 | ||
| P/B | 0.92 | ||
| P/tB | 3.51 | ||
| EV/EBITDA | 5.4 |
EPS(TTM)1.99
EY11.23%
EPS(NY)2.06
Fwd EY11.65%
FCF(TTM)1.25
FCFY7.08%
OCF(TTM)2.96
OCFY16.7%
SpS23.77
BVpS19.2
TBVpS5.05
PEG (NY)N/A
PEG (5Y)4.14
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.93% | ||
| ROE | 10.96% | ||
| ROCE | 5.33% | ||
| ROIC | 4.66% | ||
| ROICexc | 6.57% | ||
| ROICexgc | 15.19% | ||
| OM | 7.75% | ||
| PM (TTM) | 8.85% | ||
| GM | 31.12% | ||
| FCFM | 5.28% |
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-Score5
Asset Turnover0.44
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.56 | ||
| Debt/FCF | 10.85 | ||
| Debt/EBITDA | 2.86 | ||
| Cap/Depr | 89.35% | ||
| Cap/Sales | 7.17% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 78.91% | ||
| Profit Quality | 59.6% | ||
| Current Ratio | 1.33 | ||
| Quick Ratio | 0.98 | ||
| Altman-Z | 0.97 |
F-Score5
WACC7.27%
ROIC/WACC0.64
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)-1%
EPS 3Y0.17%
EPS 5Y2.15%
EPS Q2Q%2.08%
EPS Next Y-8.78%
EPS Next 2Y2.12%
EPS Next 3Y6.25%
EPS Next 5Y3.87%
Revenue 1Y (TTM)11.2%
Revenue growth 3Y2.74%
Revenue growth 5Y0.67%
Sales Q2Q%16.27%
Revenue Next Year8.41%
Revenue Next 2Y6.91%
Revenue Next 3Y5.77%
Revenue Next 5Y5.51%
EBIT growth 1Y4.09%
EBIT growth 3Y5.66%
EBIT growth 5Y0.14%
EBIT Next Year72.32%
EBIT Next 3Y28.53%
EBIT Next 5Y23.39%
FCF growth 1Y200.73%
FCF growth 3Y-16.32%
FCF growth 5Y11.59%
OCF growth 1Y1.22%
OCF growth 3Y-9.57%
OCF growth 5Y1.66%