10Y annualized return is
positive but below market average
at 6.7% per year
HPE has met or exceeded earnings expectations in
all
recent quarters (2/2)
Attractive Price-to-Earnings Ratio
Low Price-to-Sales Ratio
Strong Return on Equity
Healthy Gross Profit Margin
Strong Interest Coverage
Good Current Ratio
📈 Record Revenue Growth
🔒 Strong Competitive Position
✅ Strong Cash Flow Management
🚀 AI and Hybrid Cloud Opportunities
📊 Positive Customer Sentiment
Higher EV/EBITDA Ratio
Lower Operating Profit Margin
Moderate Debt Levels
⚠️ Margin Pressures
🔄 Order Lumps and Risks
Hewlett Packard Enterprise demonstrated robust business quality with record revenue and strong cash flow, though it faces challenges with margin pressures and order volatility in its AI segment. Future prospects are promising with a strong focus on AI and hybrid cloud, supported by positive customer sentiment and anticipated IT spending growth in 2025.
Analysis Date: December 5, 2024
Last Updated: March 12, 2025
Past performance does not guarantee future results. The data presented is indicative and may not be updated in real-time.
Hewlett Packard Enterprise Company (HPE) helps businesses manage and use their data effectively. They provide servers, which are powerful computers that store and process information, and networking equipment to connect devices. HPE also offers services to help companies set up and maintain their technology, making it easier for them to run their operations smoothly. Essentially, HPE provides the tools and support that businesses need to work with their data and technology efficiently.
Streams of revenue
Geographic Distribution
Core Products
Business Type
Business to Business
Competitive Advantages
Key Business Risks
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$26.56
Current Market Price: $12.77
IV/P Ratio: 2.08x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
52.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for HPE
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (6.09)
P/B ratio ≤ 1.5 (0.67)
Current ratio ≥ 2.0 (1.33x)
Long-term debt < Net current assets (1.64x)
Margin of safety (52.0%)
HPE does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
11.79%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-29)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
30.84%
Higher values indicate better efficiency in production
TTM (as of 2025-04-29)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
8.86%
Higher values indicate better overall profitability
TTM (as of 2025-04-29)
HPE has a Return on Equity (ROE) of 11.35%, indicating effective management in generating profit from shareholders' equity.
The Gross Profit Margin of 32.21% indicates that HPE retains a significant portion of sales as profit after accounting for direct costs of goods sold.
The Operating Profit Margin of 7.60% suggests that while gross profits are strong, operational efficiency could be improved.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.71x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q1 2025
Current Ratio
Current assets divided by current liabilities
1.33x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q1 2025
HPE's Interest Coverage ratio of 20.78 indicates a strong ability to meet interest obligations, suggesting good financial health.
A Current Ratio of 1.29 reflects that HPE has more current assets than current liabilities, indicating good short-term financial health.
HPE's Debt-to-Equity ratio of 0.74 and Debt-to-Assets ratio of 0.26 indicate a moderate level of debt, which could pose risks if not managed prudently.
Meeting Expectations
Higher values indicate better execution and credibility
Recent Results
EPS
HPE achieved record quarterly revenue of $8.5 billion, up 15% year-over-year, showcasing strong demand across segments, particularly in AI systems and hybrid cloud.
The ongoing acquisition of Juniper Networks is expected to enhance HPE's portfolio, providing a complete edge-to-cloud solution and strengthening its competitive position in networking and AI.
HPE generated a record $2.3 billion in free cash flow for fiscal 2024, exceeding guidance and reflecting disciplined cost management and operational efficiency.
Despite strong revenue growth, HPE experienced a gross margin decline of 390 basis points year-over-year, attributed to a lower contribution from Intelligent Edge revenue and higher AI systems mix.
HPE's strategic focus on AI and hybrid cloud positions it well for future growth, with expected customer adoption of AI systems and digital transformation initiatives driving demand.
Customer conversations indicate higher IT spending in 2025, with multiple tailwinds contributing to revenue growth, particularly in AI and hybrid cloud segments.
The AI systems business is characterized by lumpy orders, with a significant de-booking of a $700 million order due to risk concerns, potentially indicating volatility in revenue recognition.