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Hewlett Packard Enterprise Co HPE

Morningstar Rating
$17.15 +1.59 (10.22%)
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Company Report

HPE Earnings: Softer Short-Term Guidance Appears Finite and Has No Impact on Our Long-Term Thesis

We maintain our $16 fair value estimate for shares of Hewlett Packard Enterprise after it reported weak fiscal first-quarter results, but we maintain our long-term thesis. HPE’s main end markets continue to be plagued by weaker demand. Once the bright spot of networking, it is softening now, which matches what peers like Cisco are seeing in the campus market where HPE largely plays. We expect networking softness to weigh on HPE’s profitability through fiscal 2024. Management is guiding for more weakness next quarter, but for a much better second half of the fiscal year, largely driven by improving growth for GPU servers for artificial intelligence applications. Shares dipped 4% on weaker near-term guidance and we see the stock as fairly valued.

Price vs Fair Value

HPE is trading at a 7% premium.
Price
$17.15
Fair Value
$12.00
Uncertainty
Medium
1-Star Price
$89.10
5-Star Price
$65.50
Economic Moat
Cpm
Capital Allocation
Sfmkhvbp

Bulls Say, Bears Say

Bulls

We view HPE as the leader among peers in offering its entire portfolio as-a-service, which could give it an advantage in winning customers and reduce cyclicality in the future.

Bears

HPE participates in commoditylike markets to earn most of its revenue, which offer slim profit margins and erode an economic moat.

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News

Trading Information

Previous Close Price
$15.56
Day Range
$15.7617.31
52-Week Range
$13.6618.14
Bid/Ask
$17.09 / $17.31
Market Cap
$22.29 Bil
Volume/Avg
41.2 Mil / 13.0 Mil

Key Statistics

Price/Earnings (Normalized)
7.94
Price/Sales
0.77
Dividend Yield (Trailing)
2.86%
Dividend Yield (Forward)
3.03%
Total Yield
4.75%

Company Profile

Hewlett Packard Enterprise is an information technology vendor that provides hardware and software to enterprises. Its primary product lines are compute servers, storage arrays, and networking equipment; it also has a high-performance computing business. HPE’s stated goal is to be a complete edge-to-cloud company, and its portfolio enables hybrid clouds and hyperconverged infrastructure. It uses a primarily outsourced manufacturing model and employs 60,000 people worldwide.
Sector
Technology
Industry
Communication Equipment
Stock Style Box
Mid Value
Total Number of Employees
62,000

Competitors

Valuation

Metric
HPE
DELL
CSCO
Price/Earnings (Normalized)
7.9418.0911.91
Price/Book Value
1.044.30
Price/Sales
0.771.023.51
Price/Cash Flow
4.1310.3612.44
Price/Earnings
HPE
DELL
CSCO

Financial Strength

Metric
HPE
DELL
CSCO
Quick Ratio
0.520.471.10
Current Ratio
0.870.761.37
Interest Coverage
15.293.1533.76
Quick Ratio
HPE
DELL
CSCO

Profitability

Metric
HPE
DELL
CSCO
Return on Assets (Normalized)
5.02%5.79%17.02%
Return on Equity (Normalized)
13.88%38.38%
Return on Invested Capital (Normalized)
8.80%23.05%30.59%
Return on Assets
HPE
DELL
CSCO
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