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. HPE has a medium profitability rating, but doesn't score so well on its financial health evaluation. HPE scores decently on growth, while it is valued quite cheap. This could make an interesting combination.
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.
HPE had positive earnings in 4 of the past 5 years.
Each year in the past 5 years HPE had a positive operating cash flow.
1.2 Ratios
With a decent Return On Assets value of 3.58%, HPE is doing good in the industry, outperforming 67.74% of the companies in the same industry.
Looking at the Return On Equity, with a value of 10.29%, HPE belongs to the top of the industry, outperforming 83.87% of the companies in the same industry.
HPE has a Return On Invested Capital (4.82%) which is in line with its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for HPE is significantly below the industry average of 17.13%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.58% | ||
| ROE | 10.29% | ||
| ROIC | 4.82% |
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 (8.48%) than 80.65% of its industry peers.
HPE's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 8.28%, HPE is in the better half of the industry, outperforming 70.97% of the companies in the same industry.
In the last couple of years the Operating Margin of HPE has remained more or less at the same level.
The Gross Margin of HPE (32.79%) 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 | 8.28% | ||
| PM (TTM) | 8.48% | ||
| GM | 32.79% |
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
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so HPE is destroying value.
Compared to 1 year ago, HPE has more shares outstanding
Compared to 5 years ago, HPE has more shares outstanding
The debt/assets ratio for HPE is higher compared to a year ago.
2.2 Solvency
Based on the Altman-Z score of 0.99, we must say that HPE is in the distress zone and has some risk of bankruptcy.
HPE's Altman-Z score of 0.99 is on the low side compared to the rest of the industry. HPE is outperformed by 67.74% of its industry peers.
The Debt to FCF ratio of HPE is 9.24, which is on the high side as it means it would take HPE, 9.24 years of fcf income to pay off all of its debts.
HPE has a Debt to FCF ratio (9.24) which is in line with its industry peers.
HPE has a Debt/Equity ratio of 0.58. This is a neutral value indicating HPE is somewhat dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.58, HPE is in line with its industry, outperforming 48.39% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.58 | ||
| Debt/FCF | 9.24 | ||
| Altman-Z | 0.99 |
ROIC/WACC0.64
WACC7.49%
2.3 Liquidity
A Current Ratio of 1.29 indicates that HPE should not have too much problems paying its short term obligations.
With a Current ratio value of 1.29, HPE is not doing good in the industry: 64.52% of the companies in the same industry are doing better.
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 (0.99) which is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.29 | ||
| Quick Ratio | 0.99 |
3. Growth
3.1 Past
HPE shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -8.33%.
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 been growing slightly by 3.40% in the past year.
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)-8.33%
EPS 3Y0.17%
EPS 5Y2.15%
EPS Q2Q%11.54%
Revenue 1Y (TTM)3.4%
Revenue growth 3Y2.74%
Revenue growth 5Y0.67%
Sales Q2Q%15.06%
3.2 Future
The Earnings Per Share is expected to grow by 2.98% on average over the next years.
The Revenue is expected to grow by 5.43% on average over the next years.
EPS Next Y8.45%
EPS Next 2Y7.81%
EPS Next 3Y6.53%
EPS Next 5Y2.98%
Revenue Next Year8.64%
Revenue Next 2Y6.58%
Revenue Next 3Y5.33%
Revenue Next 5Y5.43%
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.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 10.68, which indicates a very decent valuation of HPE.
87.10% of the companies in the same industry are more expensive than HPE, based on the Price/Earnings ratio.
HPE is valuated cheaply when we compare the Price/Earnings ratio to 29.63, which is the current average of the S&P500 Index.
A Price/Forward Earnings ratio of 9.84 indicates a reasonable valuation of HPE.
Based on the Price/Forward Earnings ratio, HPE is valued cheaply inside the industry as 80.65% of the companies are valued more expensively.
HPE is valuated cheaply when we compare the Price/Forward Earnings ratio to 22.68, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.68 | ||
| Fwd PE | 9.84 |
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 93.55% of the companies listed in the same industry.
90.32% of the companies in the same industry are more expensive than HPE, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 14.09 | ||
| EV/EBITDA | 6.17 |
4.3 Compensation for Growth
HPE's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
HPE has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)1.26
PEG (5Y)4.96
EPS Next 2Y7.81%
EPS Next 3Y6.53%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.44%, HPE has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 3.03, HPE pays a better dividend. On top of this HPE pays more dividend than 90.32% of the companies listed in the same industry.
HPE's Dividend Yield is comparable with the S&P500 average which is at 2.29.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.44% |
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 Years1
Div Non Decr Years8
5.3 Sustainability
26.47% of the earnings are spent on dividend by HPE. This is a low number and sustainable payout ratio.
HPE's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP26.47%
EPS Next 2Y7.81%
EPS Next 3Y6.53%
21.14
-0.6 (-2.76%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryTechnology Hardware, Storage & Peripherals
Earnings (Last)
Earnings (Next)
Inst Owners83.84%
Inst Owner Change1.03%
Ins Owners0.37%
Ins Owner Change8.58%
Market Cap27.81B
Analysts75.79
Price Target24.94 (17.98%)
Short Float %2.5%
Short Ratio2.12
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.44% |
Yearly Dividend0.52
Dividend Growth(5Y)3.2%
DP26.47%
Div Incr Years1
Div Non Decr Years8
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)4.36%
Min EPS beat(2)2.93%
Max EPS beat(2)5.8%
EPS beat(4)4
Avg EPS beat(4)5.25%
Min EPS beat(4)2.93%
Max EPS beat(4)6.92%
EPS beat(8)8
Avg EPS beat(8)6.23%
EPS beat(12)10
Avg EPS beat(12)4.96%
EPS beat(16)14
Avg EPS beat(16)6.81%
Revenue beat(2)1
Avg Revenue beat(2)0.47%
Min Revenue beat(2)-0.52%
Max Revenue beat(2)1.45%
Revenue beat(4)2
Avg Revenue beat(4)-0.12%
Min Revenue beat(4)-5.97%
Max Revenue beat(4)4.54%
Revenue beat(8)3
Avg Revenue beat(8)-0.49%
Revenue beat(12)4
Avg Revenue beat(12)-0.34%
Revenue beat(16)6
Avg Revenue beat(16)-0.37%
PT rev (1m)3.41%
PT rev (3m)15.57%
EPS NQ rev (1m)0.52%
EPS NQ rev (3m)1.82%
EPS NY rev (1m)0.4%
EPS NY rev (3m)1.07%
Revenue NQ rev (1m)0.41%
Revenue NQ rev (3m)3.67%
Revenue NY rev (1m)-0.16%
Revenue NY rev (3m)1.14%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.68 | ||
| Fwd PE | 9.84 | ||
| P/S | 0.92 | ||
| P/FCF | 14.09 | ||
| P/OCF | 6.41 | ||
| P/B | 1.12 | ||
| P/tB | 4.47 | ||
| EV/EBITDA | 6.17 |
EPS(TTM)1.98
EY9.37%
EPS(NY)2.15
Fwd EY10.16%
FCF(TTM)1.5
FCFY7.1%
OCF(TTM)3.3
OCFY15.61%
SpS22.9
BVpS18.87
TBVpS4.73
PEG (NY)1.26
PEG (5Y)4.96
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.58% | ||
| ROE | 10.29% | ||
| ROCE | 5.51% | ||
| ROIC | 4.82% | ||
| ROICexc | 7.12% | ||
| ROICexgc | 17.6% | ||
| OM | 8.28% | ||
| PM (TTM) | 8.48% | ||
| GM | 32.79% | ||
| FCFM | 6.55% |
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 Turnover0.42
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.58 | ||
| Debt/FCF | 9.24 | ||
| Debt/EBITDA | 2.82 | ||
| Cap/Depr | 92.32% | ||
| Cap/Sales | 7.86% | ||
| Interest Coverage | 3.23 | ||
| Cash Conversion | 85.82% | ||
| Profit Quality | 77.29% | ||
| Current Ratio | 1.29 | ||
| Quick Ratio | 0.99 | ||
| Altman-Z | 0.99 |
F-Score5
WACC7.49%
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)-8.33%
EPS 3Y0.17%
EPS 5Y2.15%
EPS Q2Q%11.54%
EPS Next Y8.45%
EPS Next 2Y7.81%
EPS Next 3Y6.53%
EPS Next 5Y2.98%
Revenue 1Y (TTM)3.4%
Revenue growth 3Y2.74%
Revenue growth 5Y0.67%
Sales Q2Q%15.06%
Revenue Next Year8.64%
Revenue Next 2Y6.58%
Revenue Next 3Y5.33%
Revenue Next 5Y5.43%
EBIT growth 1Y2.13%
EBIT growth 3Y5.66%
EBIT growth 5Y0.14%
EBIT Next Year91.87%
EBIT Next 3Y28.27%
EBIT Next 5Y23.39%
FCF growth 1Y23.38%
FCF growth 3Y-16.32%
FCF growth 5Y11.59%
OCF growth 1Y-1.96%
OCF growth 3Y-9.57%
OCF growth 5Y1.66%