HEWLETT PACKARD ENTERPRISE (HPE) Stock Fundamental Analysis
NYSE:HPE - New York Stock Exchange, Inc. - US42824C1099 - Common Stock - Currency: USD
HPE gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 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 has a decent growth rate and is not valued too expensively.
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 (2.02%) is comparable to the rest of the industry.
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.
Looking at the Return On Invested Capital, with a value of 4.54%, HPE is in line with its industry, outperforming 59.38% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for HPE is significantly below the industry average of 16.14%.
| 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
The Profit Margin of HPE (4.34%) is better than 71.88% of its industry peers.
HPE's Profit Margin has improved in the last couple of years.
HPE has a Operating Margin of 6.98%. This is comparable to the rest of the industry: HPE outperforms 59.38% of its industry peers.
HPE's Operating Margin has been stable in the last couple of years.
Looking at the Gross Margin, with a value of 30.05%, HPE is in line with its industry, outperforming 46.88% 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 | 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.
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
HPE has an Altman-Z score of 1.02. This is a bad value and indicates that HPE is not financially healthy and even has some risk of bankruptcy.
The Altman-Z score of HPE (1.02) is comparable to the rest of the industry.
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.
With a Debt to FCF ratio value of 163.83, HPE perfoms like the industry average, outperforming 46.88% of the companies in the same industry.
A Debt/Equity ratio of 0.52 indicates that HPE is somewhat dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.52, HPE is in line with its industry, outperforming 46.88% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.52 | ||
| Debt/FCF | 163.83 | ||
| Altman-Z | 1.02 |
ROIC/WACC0.46
WACC9.94%
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.
HPE has a worse Current ratio (1.29) than 62.50% of its industry peers.
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 (0.96) which is in line with its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.29 | ||
| Quick Ratio | 0.96 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 2.09% over the past 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.
The Revenue has grown by 11.79% in the past year. This is quite good.
The Revenue has been growing slightly by 0.67% on average over the past years.
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
HPE is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 5.81% yearly.
The Revenue is expected to grow by 5.70% on average over the next years.
EPS Next Y-9.19%
EPS Next 2Y3.75%
EPS Next 3Y6.27%
EPS Next 5Y5.81%
Revenue Next Year8.85%
Revenue Next 2Y6.89%
Revenue Next 3Y6.09%
Revenue Next 5Y5.7%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
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
A Price/Earnings ratio of 10.94 indicates a reasonable valuation of HPE.
Based on the Price/Earnings ratio, HPE is valued cheaper than 87.50% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 27.45. HPE is valued rather cheaply when compared to this.
HPE is valuated reasonably with a Price/Forward Earnings ratio of 10.01.
78.13% 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 21.90, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.94 | ||
| Fwd PE | 10.01 |
4.2 Price Multiples
90.63% of the companies in the same industry are more expensive than HPE, based on the Enterprise Value to EBITDA ratio.
The rest of the industry has a similar Price/Free Cash Flow ratio as HPE.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 261.98 | ||
| EV/EBITDA | 7.27 |
4.3 Compensation for Growth
PEG (NY)N/A
PEG (5Y)5.08
EPS Next 2Y3.75%
EPS Next 3Y6.27%
5. Dividend
5.1 Amount
HPE has a Yearly Dividend Yield of 2.83%.
Compared to an average industry Dividend Yield of 1.99, HPE pays a better dividend. On top of this HPE pays more dividend than 96.88% of the companies listed in the same industry.
HPE's Dividend Yield is comparable with the S&P500 average which is at 2.42.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.83% |
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 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.
HPE's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP53.5%
EPS Next 2Y3.75%
EPS Next 3Y6.27%
21.34
+0.09 (+0.42%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryTechnology Hardware, Storage & Peripherals
Earnings (Last)
Earnings (Next)
Inst Owners91.27%
Inst Owner Change8.41%
Ins Owners0.41%
Ins Owner Change2.01%
Market Cap28.03B
Analysts75.79
Price Target20.69 (-3.05%)
Short Float %2.94%
Short Ratio2.17
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.83% |
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)12.39%
PT rev (3m)2.24%
EPS NQ rev (1m)1.21%
EPS NQ rev (3m)1.21%
EPS NY rev (1m)-0.45%
EPS NY rev (3m)-1.12%
Revenue NQ rev (1m)2.53%
Revenue NQ rev (3m)2.51%
Revenue NY rev (1m)0.41%
Revenue NY rev (3m)0.15%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.94 | ||
| Fwd PE | 10.01 | ||
| P/S | 0.89 | ||
| P/FCF | 261.98 | ||
| P/OCF | 12.02 | ||
| P/B | 1.17 | ||
| P/tB | 4.23 | ||
| EV/EBITDA | 7.27 |
EPS(TTM)1.95
EY9.14%
EPS(NY)2.13
Fwd EY9.99%
FCF(TTM)0.08
FCFY0.38%
OCF(TTM)1.78
OCFY8.32%
SpS24.09
BVpS18.17
TBVpS5.05
PEG (NY)N/A
PEG (5Y)5.08
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 | 1.02 |
F-Score4
WACC9.94%
ROIC/WACC0.46
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-9.19%
EPS Next 2Y3.75%
EPS Next 3Y6.27%
EPS Next 5Y5.81%
Revenue 1Y (TTM)11.79%
Revenue growth 3Y2.74%
Revenue growth 5Y0.67%
Sales Q2Q%5.87%
Revenue Next Year8.85%
Revenue Next 2Y6.89%
Revenue Next 3Y6.09%
Revenue Next 5Y5.7%
EBIT growth 1Y-0.76%
EBIT growth 3Y5.66%
EBIT growth 5Y0.14%
EBIT Next Year67.25%
EBIT Next 3Y27.85%
EBIT Next 5Y23.39%
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%