HEWLETT PACKARD ENTERPRISE (HPE) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:HPE - US42824C1099 - Common Stock
21.6 USD
+0.23 (+1.08%)
21.7453 USD
+0.15 (+0.67%)
Overall HPE gets a fundamental rating of 4 out of 10. We evaluated HPE against 35 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. A decent growth rate in combination with a cheap valuation! Better keep an eye on HPE.
1. Profitability
1.1 Basic Checks
- In the past year HPE was profitable.
- HPE had a positive operating cash flow in the past year.
- HPE had positive earnings in 4 of the past 5 years.
- HPE had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
- HPE's Return On Assets of -0.08% is fine compared to the rest of the industry. HPE outperforms 65.71% of its industry peers.
- HPE has a Return On Equity of -0.24%. This is in the better half of the industry: HPE outperforms 77.14% of its industry peers.
- HPE has a better Return On Invested Capital (2.80%) than 65.71% of its industry peers.
- HPE had an Average Return On Invested Capital over the past 3 years of 4.48%. This is significantly below the industry average of 16.06%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -0.08% | ||
| ROE | -0.24% | ||
| ROIC | 2.8% |
ROA(3y)2.35%
ROA(5y)2.9%
ROE(3y)6.54%
ROE(5y)8.23%
ROIC(3y)4.48%
ROIC(5y)4.78%
1.3 Margins
- HPE has a better Operating Margin (4.79%) than 65.71% of its industry peers.
- HPE's Operating Margin has declined in the last couple of years.
- With a Gross Margin value of 30.26%, HPE perfoms like the industry average, outperforming 54.29% of the companies in the same industry.
- In the last couple of years the Gross Margin of HPE has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 4.79% | ||
| PM (TTM) | N/A | ||
| GM | 30.26% |
OM growth 3Y-15.03%
OM growth 5Y-4.02%
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y-3.2%
GM growth 5Y-0.73%
2. Health
2.1 Basic Checks
- With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), HPE is destroying value.
- Compared to 1 year ago, HPE has more shares outstanding
- HPE has more shares outstanding than it did 5 years ago.
- Compared to 1 year ago, HPE has a worse debt to assets ratio.
2.2 Solvency
- Based on the Altman-Z score of 0.81, we must say that HPE is in the distress zone and has some risk of bankruptcy.
- HPE has a Altman-Z score of 0.81. This is comparable to the rest of the industry: HPE outperforms 45.71% of its industry peers.
- HPE has a debt to FCF ratio of 35.67. This is a negative value and a sign of low solvency as HPE would need 35.67 years to pay back of all of its debts.
- The Debt to FCF ratio of HPE (35.67) is comparable to the rest of the industry.
- HPE has a Debt/Equity ratio of 0.72. This is a neutral value indicating HPE is somewhat dependend on debt financing.
- The Debt to Equity ratio of HPE (0.72) is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.72 | ||
| Debt/FCF | 35.67 | ||
| Altman-Z | 0.81 |
ROIC/WACC0.4
WACC6.99%
2.3 Liquidity
- HPE has a Current Ratio of 1.01. 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 worse Current ratio (1.01) than 62.86% of its industry peers.
- HPE has a Quick Ratio of 1.01. 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 of 0.76. This is comparable to the rest of the industry: HPE outperforms 48.57% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.01 | ||
| Quick Ratio | 0.76 |
3. Growth
3.1 Past
- The earnings per share for HPE have decreased by -2.53% 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 7.41% on average per year.
- The Revenue has grown by 13.84% 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 4.91% on average per year.
EPS 1Y (TTM)-2.53%
EPS 3Y-1.51%
EPS 5Y7.41%
EPS Q2Q%6.9%
Revenue 1Y (TTM)13.84%
Revenue growth 3Y6.37%
Revenue growth 5Y4.91%
Sales Q2Q%14.44%
3.2 Future
- HPE is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 15.81% yearly.
- Based on estimates for the next years, HPE will show a small growth in Revenue. The Revenue will grow by 7.54% on average per year.
EPS Next Y23.86%
EPS Next 2Y19.73%
EPS Next 3Y17.12%
EPS Next 5Y15.81%
Revenue Next Year18.19%
Revenue Next 2Y11.82%
Revenue Next 3Y9.25%
Revenue Next 5Y7.54%
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
- HPE is valuated reasonably with a Price/Earnings ratio of 11.19.
- HPE's Price/Earnings ratio is rather cheap when compared to the industry. HPE is cheaper than 97.14% of the companies in the same industry.
- Compared to an average S&P500 Price/Earnings ratio of 27.25, HPE is valued rather cheaply.
- The Price/Forward Earnings ratio is 9.04, which indicates a very decent valuation of HPE.
- 85.71% of the companies in the same industry are more expensive than HPE, based on the Price/Forward Earnings ratio.
- HPE is valuated cheaply when we compare the Price/Forward Earnings ratio to 25.98, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.19 | ||
| Fwd PE | 9.04 |
4.2 Price Multiples
- Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of HPE indicates a rather cheap valuation: HPE is cheaper than 85.71% of the companies listed in the same industry.
- The rest of the industry has a similar Price/Free Cash Flow ratio as HPE.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 45.45 | ||
| EV/EBITDA | 10.22 |
4.3 Compensation for Growth
- HPE's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
- HPE's earnings are expected to grow with 17.12% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.47
PEG (5Y)1.51
EPS Next 2Y19.73%
EPS Next 3Y17.12%
5. Dividend
5.1 Amount
- HPE has a Yearly Dividend Yield of 2.67%. 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 0.66. HPE pays more dividend than 91.43% of the companies in the same industry.
- HPE's Dividend Yield is a higher than the S&P500 average which is at 1.82.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.67% |
5.2 History
- The dividend of HPE has a limited annual growth rate of 4.91%.
- 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)4.91%
Div Incr Years2
Div Non Decr Years9
5.3 Sustainability
- The earnings of HPE are negative and hence is the payout ratio. HPE will probably not be able to sustain this dividend level.
- HPE's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP-1349.15%
EPS Next 2Y19.73%
EPS Next 3Y17.12%
HEWLETT PACKARD ENTERPRISE / HPE FAQ
What is the fundamental rating for HPE stock?
ChartMill assigns a fundamental rating of 4 / 10 to HPE.
What is the valuation status of HEWLETT PACKARD ENTERPRISE (HPE) stock?
ChartMill assigns a valuation rating of 7 / 10 to HEWLETT PACKARD ENTERPRISE (HPE). This can be considered as Undervalued.
What is the profitability of HPE stock?
HEWLETT PACKARD ENTERPRISE (HPE) has a profitability rating of 4 / 10.
How financially healthy is HEWLETT PACKARD ENTERPRISE?
The financial health rating of HEWLETT PACKARD ENTERPRISE (HPE) is 2 / 10.
How sustainable is the dividend of HEWLETT PACKARD ENTERPRISE (HPE) stock?
The dividend rating of HEWLETT PACKARD ENTERPRISE (HPE) is 6 / 10 and the dividend payout ratio is -1349.15%.