HEWLETT PACKARD ENTERPRISE (HPE) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:HPE - US42824C1099 - Common Stock
21.05 USD
-0.31 (-1.45%)
21.01 USD
-0.04 (-0.19%)
HPE gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals 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
- 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'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's Return On Equity of -0.24% is fine compared to the rest of the industry. HPE outperforms 77.14% of its industry peers.
- The Return On Invested Capital of HPE (2.80%) is better than 65.71% 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 16.06%.
| 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.
- In the last couple of years the Operating Margin of HPE has declined.
- With a Gross Margin value of 30.26%, HPE perfoms like the industry average, outperforming 54.29% 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 | 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.
- HPE has more shares outstanding than it did 1 year ago.
- Compared to 5 years ago, HPE has more shares outstanding
- HPE has a worse debt/assets ratio than last year.
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.
- Looking at the Altman-Z score, with a value of 0.81, HPE is in line with its industry, outperforming 42.86% of the companies in the same industry.
- 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.
- With a Debt to FCF ratio value of 35.67, HPE perfoms like the industry average, outperforming 48.57% of the companies in the same industry.
- A Debt/Equity ratio of 0.72 indicates that HPE is somewhat dependend on debt financing.
- HPE's Debt to Equity ratio of 0.72 is in line compared to the rest of the industry. HPE outperforms 51.43% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.72 | ||
| Debt/FCF | 35.67 | ||
| Altman-Z | 0.81 |
ROIC/WACC0.4
WACC6.97%
2.3 Liquidity
- A Current Ratio of 1.01 indicates that HPE should not have too much problems paying its short term obligations.
- HPE's Current ratio of 1.01 is on the low side compared to the rest of the industry. HPE is outperformed by 62.86% of its industry peers.
- A Quick Ratio of 0.76 indicates that HPE may have some problems paying its short term obligations.
- With a Quick ratio value of 0.76, HPE perfoms like the industry average, outperforming 48.57% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.01 | ||
| Quick Ratio | 0.76 |
3. Growth
3.1 Past
- HPE shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -2.53%.
- 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.
- Looking at the last year, HPE shows a quite strong growth in Revenue. The Revenue has grown by 13.84% in the last year.
- 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
- Based on estimates for the next years, HPE will show a quite strong growth in Earnings Per Share. The EPS will grow by 15.81% on average per year.
- HPE is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 7.54% yearly.
EPS Next Y23.77%
EPS Next 2Y19.75%
EPS Next 3Y17.21%
EPS Next 5Y15.81%
Revenue Next Year18.14%
Revenue Next 2Y11.81%
Revenue Next 3Y9.23%
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
- Based on the Price/Earnings ratio of 10.91, the valuation of HPE can be described as reasonable.
- 97.14% 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 27.21, which is the current average of the S&P500 Index.
- The Price/Forward Earnings ratio is 8.81, which indicates a very decent valuation of HPE.
- Based on the Price/Forward Earnings ratio, HPE is valued cheaply inside the industry as 85.71% of the companies are valued more expensively.
- HPE is valuated cheaply when we compare the Price/Forward Earnings ratio to 24.26, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.91 | ||
| Fwd PE | 8.81 |
4.2 Price Multiples
- Based on the Enterprise Value to EBITDA ratio, HPE is valued cheaper than 85.71% of the companies 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 | 44.3 | ||
| 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.
- A more expensive valuation may be justified as HPE's earnings are expected to grow with 17.21% in the coming years.
PEG (NY)0.46
PEG (5Y)1.47
EPS Next 2Y19.75%
EPS Next 3Y17.21%
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.
- Compared to an average industry Dividend Yield of 0.64, HPE pays a better dividend. On top of this HPE pays more dividend than 91.43% of the companies listed in the same industry.
- Compared to an average S&P500 Dividend Yield of 1.82, HPE pays a bit more dividend than the S&P500 average.
| 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.
- HPE has not decreased its dividend in the past 5 years, so it has a somewhat stable track record.
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.
- The dividend of HPE is growing, but earnings are growing more, so the dividend growth is sustainable.
DP-1349.15%
EPS Next 2Y19.75%
EPS Next 3Y17.21%
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%.