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Hewlett Packard Enterprise (HPE)
:HPE
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Hewlett Packard Enterprise
(NYSE:HPE)
67Neutral
Positive Factors
AI Systems Demand
HPE cumulative AI systems orders increased to $8.3bn from $6.7bn in the previous quarter.
Cost Efficiency
The announced cost takeout and an additional $450mn from a potential acquisition could provide almost $800mn in total savings or approximately $0.60 in EPS, which is extremely meaningful.
Networking Segment Performance
Intelligent Edge, specifically Aruba Networking, was a positive area with revenue up 2% quarter over quarter and operating profit increasing significantly.
Negative Factors
Financial Guidance
HPE's 2Q25 revenue guidance of $7.4b was $534m below street expectations, with an EPS miss as well.
Inventory Management
Hewlett Packard Enterprise has too much Nvidia Hopper inventory for their AI servers, which needs to be worked through.
Pricing Competition
The company's core servers are facing significant pricing competition, and HPE did not price correctly.
Hewlett Packard Enterprise (HPE) vs. S&P 500 (SPY)
Market Cap
$16.80B
Dividend Yield4.07%
Average Volume (3M)24.85M
Price to Earnings (P/E)6.3
Beta (1Y)1.68
Revenue Growth10.93%
EPS Growth43.19%
CountryUS
Employees61,000
SectorTechnology
Sector Strength40
IndustryCommunication Equipment
Share Statistics
EPS (TTM)2.02
Shares Outstanding1,313,578,200
10 Day Avg. Volume25,260,275
30 Day Avg. Volume24,847,472
Financial Highlights & Ratios
PEG Ratio0.15
Price to Book (P/B)N/A
Price to Sales (P/S)0.68
Price to Cash Flow (P/CF)-13.50
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$18.67Price Target Upside45.97% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering9
Hewlett Packard Enterprise Business Overview & Revenue Model
Company DescriptionHewlett Packard Enterprise (HPE) is a global technology company specializing in developing and providing enterprise products and solutions. Operating in sectors such as IT infrastructure, cloud services, and software, HPE focuses on offering a comprehensive portfolio of solutions that enable organizations to optimize their IT environments. Their core products and services include servers, storage systems, networking products, and software solutions that cater to the needs of businesses for digital transformation.
How the Company Makes MoneyHewlett Packard Enterprise makes money through a diversified revenue model that includes the sale of IT hardware, software, and services. Key revenue streams for HPE include its Hybrid IT segment, which offers data center hardware like servers and storage solutions. Additionally, HPE generates income through its Intelligent Edge segment, which encompasses networking products, and its Financial Services division, providing financing and asset management solutions. Significant partnerships with technology companies and service providers also contribute to HPE's earnings by expanding its market reach and enhancing its product offerings. Furthermore, HPE's focus on subscription-based and as-a-service models, such as 'HPE GreenLake,' provides recurring revenue streams, aligning with the growing demand for flexible IT consumption models.
Hewlett Packard Enterprise Financial Statement Overview
Summary
Hewlett Packard Enterprise shows solid financial performance with consistent revenue growth and profitability. The company has a stable financial position with manageable leverage and good equity returns. Cash flow generation is strong, but there is room for improvement in cost management and cash flow efficiency.Income Statement
Hewlett Packard Enterprise shows a steady revenue growth with a 3.58% increase in TTM compared to the previous year. The Gross Profit Margin stands at 48.65%, indicating effective cost management. The Net Profit Margin of 8.86% is healthy, reflecting strong profitability. EBIT and EBITDA margins of 6.90% and 13.59% respectively, reveal solid operational efficiency. However, the slight decline in EBIT margin from 7.27% in the previous year suggests potential cost pressures.75
Positive
Balance Sheet
The company maintains a moderate Debt-to-Equity Ratio of 0.71, showing a balanced leverage. The Return on Equity (ROE) is robust at 10.96%, demonstrating effective use of shareholders' equity to generate profits. The Equity Ratio of 35.86% indicates a stable financial structure, though slightly lower compared to industry peers, suggesting room for improvement in asset financing.68
Positive
Cash Flow
Hewlett Packard Enterprise's Free Cash Flow grew by 10.24% in the TTM, highlighting strong cash generation capabilities. The Operating Cash Flow to Net Income Ratio of 1.41 reflects efficient cash conversion from earnings. The Free Cash Flow to Net Income Ratio of 0.79 indicates a healthy cash flow relative to profits, though there is room to enhance cash conversion efficiency.70
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 31.20B | 30.13B | 29.14B | 28.50B | 27.78B | 26.98B | Gross Profit |
| 9.62B | 9.84B | 10.24B | 9.51B | 9.38B | 8.47B | EBIT |
| 2.15B | 2.19B | 2.09B | 3.60B | 2.43B | 3.41B | EBITDA |
| 4.92B | 5.02B | 5.06B | 4.78B | 4.85B | 4.26B | Net Income Common Stockholders |
| 2.77B | 2.55B | 2.02B | 868.00M | 3.43B | -322.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 1.37B | 14.85B | 4.27B | 4.16B | 4.00B | 4.23B | Total Assets |
| 0.00 | 71.26B | 57.15B | 57.12B | 57.70B | 54.02B | Total Debt |
| 0.00 | 18.25B | 13.52B | 12.46B | 13.45B | 15.94B | Net Debt |
| 1.37B | 3.40B | 9.24B | 8.30B | 9.45B | 11.71B | Total Liabilities |
| 0.00 | 46.38B | 35.91B | 37.21B | 37.68B | 37.92B | Stockholders Equity |
| 38.38B | 24.82B | 21.18B | 19.86B | 19.97B | 16.05B |
| Cash Flow | Free Cash Flow | ||||
| 2.18B | 1.97B | 1.60B | 1.47B | 3.37B | -143.00M | Operating Cash Flow |
| 3.89B | 4.34B | 4.43B | 4.59B | 5.87B | 2.24B | Investing Cash Flow |
| 664.00M | -53.00M | -3.28B | -2.09B | -2.80B | -2.58B | Financing Cash Flow |
| 5.43B | 6.28B | -1.36B | -1.80B | -3.36B | 883.00M |
Hewlett Packard Enterprise Technical Analysis
Negative
12.79
Price Trends
18.55
Negative
20.16
Negative
19.70
Negative
Market Momentum
-0.93
Negative
34.11
Neutral
22.98
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HPE, the sentiment is Negative. The current price of 12.79 is below the 20-day moving average (MA) of 15.48, below the 50-day MA of 18.55, and below the 200-day MA of 19.70, indicating a bearish trend. The MACD of -0.93 indicates Negative momentum. The RSI at 34.11 is Neutral, neither overbought nor oversold. The STOCH value of 22.98 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HPE.
Hewlett Packard Enterprise Risk Analysis
Hewlett Packard Enterprise disclosed 33 risk factors in its most recent earnings report. Hewlett Packard Enterprise reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Hewlett Packard Enterprise Peers Comparison
Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $26.89B | 20.20 | 8.27% | 2.11% | -12.68% | 90.73% | |
74 Outperform | $228.00B | 25.11 | 20.02% | 2.93% | -5.34% | -30.57% | |
73 Outperform | $24.06B | 11,616.67 | 0.15% | 2.48% | -5.59% | ― | |
71 Outperform | $17.53B | 39.40 | 323.87% | 0.88% | 14.59% | 19.51% | |
67 Neutral | $16.80B | 6.33 | 12.09% | 4.07% | 10.93% | 43.19% | |
60 Neutral | $11.74B | 40.96 | 6.21% | 2.59% | -8.82% | -10.01% | |
57 Neutral | $18.57B | 9.42 | -13.42% | 2.72% | 5.01% | -23.43% |
* Technology Sector Average
Performance Comparison
HPE
Hewlett Packard Enterprise
12.79
-4.86
-27.54%
CSCO
Cisco Systems
54.54
7.71
16.46%
JNPR
Juniper Networks
33.95
-2.30
-6.34%
ERIC
Telefonaktiebolaget LM Ericsson
6.97
1.93
38.29%
NOK
Nokia
4.78
1.39
41.00%
UI
Ubiquiti Networks
273.45
162.71
146.93%
Hewlett Packard Enterprise Earnings Call Summary
Earnings Call Date: Mar 6, 2025 | % Change Since: -28.23% | Next Earnings Date: Jun 3, 2025
Earnings Call Sentiment Neutral
Hewlett Packard Enterprise reported strong revenue growth driven by the server and Intelligent Edge segments, as well as significant growth in AI system orders and GreenLake adoption. However, the company faced challenges in the server segment, with operating margin pressures due to pricing and inventory issues, compounded by recent tariff impacts. Workforce reductions and cost-saving measures are being implemented to address these challenges.Highlights
Strong Revenue Growth
Hewlett Packard Enterprise delivered a 17% year-over-year revenue growth in Q1, marking the fourth consecutive quarter of improved year-over-year top-line growth. The server business grew revenue by 30% year-over-year, with hybrid cloud also showing strong performance.
Intelligent Edge Success
The Intelligent Edge segment recorded 2% quarter-over-quarter revenue growth, with double-digit year-over-year order growth across all key geographies and products, including campus switching.
AI System Orders and Revenue
HPE booked $1.6 billion in new AI system orders in Q1, with cumulative AI system orders reaching $8.3 billion. AI systems revenue for Q1 was $900 million.
GreenLake Growth
GreenLake remains a key differentiator, ending Q1 with more than 41,000 enterprises using HPE GreenLake Cloud and AIR surpassing $2 billion for the first time, up 46% year-over-year.
New Product Launches
HPE launched several new products, including the ProLiant Gen 12 server platform and new vertical solutions for the Intelligent Edge segment, demonstrating continued innovation.
Lowlights
Server Segment Challenges
The server segment faced unexpected challenges, with operating margins falling below expectations at 8.1%, impacted by pricing strategy issues and increased competition.
Tariff and Inventory Pressures
The recent US tariff announcements and higher-than-normal AI inventory levels posed challenges. The impact of tariffs is expected to be more pronounced in Q2, affecting server margins.
Operating Margin Decline
Non-GAAP operating margin was 9.9%, down 160 basis points year-over-year and 120 basis points sequentially, primarily due to headwinds in gross margin from the server segment.
Workforce Reductions
HPE plans to reduce its employee base by 5% over the next 12 to 18 months, impacting approximately 2,500 positions as part of cost-saving measures.
Company Guidance
During the first quarter of fiscal 2025, Hewlett Packard Enterprise (HPE) demonstrated strong performance with a 17% year-over-year revenue growth, reaching $7.9 billion, despite facing challenges in the server segment. The company reported non-GAAP diluted net earnings per share of 49 cents, aligning with its outlook. HPE's server revenue surged by 30% year-over-year, although profitability was impacted due to aggressive pricing competition and inventory valuation issues. The Intelligent Edge segment recorded a 2% quarter-over-quarter revenue increase, while hybrid cloud grew by 11% year-over-year. HPE's annual recurring revenue reached $2.1 billion, up 46% year-over-year, driven by AI and Intelligent Edge. The company plans to achieve at least $350 million in gross savings by fiscal 2027 through workforce reductions and attrition management. For fiscal 2025, HPE expects constant currency revenue growth of 7% to 11%, with revenue weighted towards the second half, and non-GAAP diluted net earnings per share ranging between $1.70 and $1.90.Hewlett Packard Enterprise Corporate Events
Executive/Board ChangesShareholder Meetings
Hewlett Packard Enterprise Approves Key Amendments at Annual Meeting
Neutral
Apr 4, 2025
On April 2, 2025, Hewlett Packard Enterprise held its annual stockholders meeting where key amendments to its stock and employee plans were approved. The stockholders agreed to increase the shares available under the 2021 Stock Incentive Plan by 22 million and extended the 2015 Employee Share Purchase Plan by ten years. Additionally, the meeting included the election of 12 board members, ratification of Ernst & Young LLP as the accounting firm, and votes on executive compensation and lobbying transparency.
M&A TransactionsLegal Proceedings
HPE and Juniper Oppose DOJ Lawsuit on Acquisition
Neutral
Jan 30, 2025
On January 30, 2025, Hewlett Packard Enterprise (HPE) and Juniper Networks announced their opposition to the U.S. Department of Justice’s lawsuit that seeks to block HPE’s acquisition of Juniper. The companies argue that the acquisition will foster innovation, enhance market competition, and strengthen U.S. national security by creating a robust U.S.-based networking provider. The transaction has already been approved by multiple international regulators, and HPE and Juniper plan to defend their position in court, emphasizing the competitive nature of the WLAN market and the benefits of the combined entity for customers and the industry.
Dividends
Hewlett Packard Enterprise Declares Series C Dividend
Positive
Jan 14, 2025
On January 14, 2025, Hewlett Packard Enterprise announced that its Board of Directors approved a dividend of $0.953125 per share for its Series C Mandatory Convertible Preferred Stock, with the payment set for March 1, 2025. This decision underscores the company’s commitment to returning value to its shareholders, subject to the board’s discretion and legal availability of funds.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.