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Hewlett Packard Enterprise Co HPE

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Stock XNYS Rating as of
$20.14 −0.21 (1.03%)
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As of Delayed Price Closed

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Hewlett Packard Enterprise Earnings: No Surprises in Results, Maintaining Our Fair Value of $23

Eric Compton

Hewlett Packard Enterprise reported fiscal third-quarter results largely as we expected. With few surprises and no major updates to full-year guidance, we maintain our fair value estimate of $23. We view shares as mildly undervalued (20% as of this writing), and we think executing on additional growth within artificial intelligence servers, improving margins within the hybrid cloud business, and stronger growth within the hybrid cloud and intelligent edge segments should all help shares rerate higher over time. Another important part of our thesis is that the Juniper acquisition is generally satisfactory (still on track for an end-of-2024 or early 2025 close), as we think this could derisk some of the worries about poor execution on what is a large acquisition for HPE.

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Price vs Fair Value

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HPE is trading at a 642% premium.
Price
$20.14
Fair Value
$69.00
Uncertainty
High
1-Star Price
$95.94
5-Star Price
$23.80
Economic Moat
Wqw
Capital Allocation
Plscdks

Bulls Say, Bears Say

Bulls

HPE’s stock has been roughly flat for years, and the valuation is not overly demanding. If HPE can execute on its Juniper acquisition, reinvigorate growth in its hybrid cloud business, and turn into a long-term beneficiary of the AI server wave, there should be upside.

Bears

The AI server market’s current growth may not be durable, and most of this growth will be concentrated with hyperscalers. OEMs like HPE will only see low margins in this business.

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Trading Information

Previous Close Price
$20.35
Day Range
$20.13–20.48
52-Week Range
$14.47–22.82
Bid/Ask
$19.86 / $20.12
Market Cap
$26.16 Bil
Volume/Avg
10.4 Mil / 15.2 Mil

Key Statistics

Price/Earnings (Normalized)
10.49
Price/Sales
0.92
Dividend Yield (Trailing)
2.58%
Dividend Yield (Forward)
2.58%
Total Yield
3.17%

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. 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
Website
https://www.hpe.com

Competitors

Valuation

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Metric
HPE
DELL
CSCO
Price/Earnings (Normalized)
 10.4916.6014.21
Price/Book Value
 1.18—4.67
Price/Sales
 0.920.964.00
Price/Cash Flow
 5.0510.4714.19
Price/Earnings
HPE
DELL
CSCO

Financial Strength

Metric
HPE
DELL
CSCO
Quick Ratio
 0.470.400.69
Current Ratio
 0.940.720.91
Interest Coverage
 11.583.5111.80
Quick Ratio
HPE
DELL
CSCO

Profitability

Metric
HPE
DELL
CSCO
Return on Assets (Normalized)
 4.34%6.39%13.79%
Return on Equity (Normalized)
 11.87%—33.36%
Return on Invested Capital (Normalized)
 7.99%27.44%23.37%
Return on Assets
HPE
DELL
CSCO

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