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Hewlett Packard Enterprise (HPE)
:HPE
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Hewlett Packard Enterprise
(NYSE:HPE)72Outperform
Positive Factors
Cost Synergies
Management expects at least $450 million of synergies from the Juniper deal, with a focus on cost savings and revenue synergies.
Earnings
The results exceeded expectations with F4Q revenues and EPS beating guidance.
Negative Factors
AI Server Revenue
AI server revenues are down quarter-over-quarter, consistent with peers, due to shipment challenges.
Hewlett Packard Enterprise (HPE) vs. S&P 500 (SPY)
Market Cap
$24.74B
Dividend Yield2.73%
Average Volume (3M)13.19M
Price to Earnings (P/E)9.9
Beta (1Y)1.46
Revenue Growth3.30%
EPS Growth25.00%
CountryUS
Employees61,000
SectorTechnology
Sector Strength48
IndustryHardware & Equipment
Share Statistics
EPS (TTM)1.89
Shares Outstanding1,313,408,900
10 Day Avg. Volume11,512,227
30 Day Avg. Volume13,186,978
Financial Highlights & Ratios
PEG Ratio0.39
Price to Book (P/B)N/A
Price to Sales (P/S)0.83
Price to Cash Flow (P/CF)3.10
P/FCF Ratio3.40
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$24.60Price Target Upside30.57% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering10
Hewlett Packard Enterprise Business Overview & Revenue Model
Company DescriptionHewlett Packard Enterprise Co. engages in the provision of information technology, technology and enterprise products, solutions, and services. It operates through the following segments: Hybrid IT, Intelligent Edge, Financial Services, and Corporate Investments. The Hybrid IT segment provides a broad portfolio of services-led and software-enabled infrastructure and solutions. The Intelligent Edge segment comprises of enterprise networking and security solutions for businesses of any size, offering secure connectivity for campus and branch environments, operating under the Aruba brand. The Financial Services segment offers investment solutions, such as leasing, financing, information technology consumption, utility programs and asset management services. The Corporate Investments segment includes Hewlett Packard Labs and certain business incubation projects. The company was founded in 1939 and is headquartered in San Jose, CA.
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 exhibits a strong financial position characterized by consistent revenue growth, healthy profit margins, and effective cash flow management. The company maintains stable leverage and equity ratios, although there is room for further improvements in operational efficiency.Income Statement
Hewlett Packard Enterprise has demonstrated solid revenue growth of 3.4% from 2023 to 2024 and an impressive improvement in net profit margin to 8.47%. The gross profit margin stands at 32.67%, indicating effective cost management. However, the EBIT margin has slightly decreased, suggesting potential challenges in operational efficiency.85
Very Positive
Balance Sheet
The company's balance sheet is robust with a relatively stable debt-to-equity ratio of 0.73, providing moderate leverage. The return on equity has improved to 10.29%, reflecting better utilization of equity. However, the equity ratio is moderate at 34.83%, indicating a balanced asset structure with room for improvement in equity financing.78
Positive
Cash Flow
HPE shows strong cash flow management with a notable free cash flow growth rate of 23.38%. The operating cash flow to net income ratio is healthy at 1.70, indicating efficient cash conversion. The free cash flow to net income ratio is 0.77, suggesting good cash returns relative to income, though there's potential for enhancement.82
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 30.13B | 29.14B | 28.50B | 27.78B | 26.98B | Gross Profit |
| 9.84B | 10.24B | 9.51B | 9.38B | 8.47B | EBIT |
| 2.19B | 2.09B | 3.60B | 2.43B | 3.41B | EBITDA |
| 5.02B | 5.06B | 4.78B | 4.85B | 4.26B | Net Income Common Stockholders |
| 2.55B | 2.02B | 868.00M | 3.43B | -322.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 14.85B | 4.27B | 4.16B | 4.00B | 4.23B | Total Assets |
| 71.26B | 57.15B | 57.12B | 57.70B | 54.02B | Total Debt |
| 18.25B | 13.52B | 12.46B | 13.45B | 15.94B | Net Debt |
| 3.40B | 9.24B | 8.30B | 9.45B | 11.71B | Total Liabilities |
| 46.38B | 35.91B | 37.21B | 37.68B | 37.92B | Stockholders Equity |
| 24.82B | 21.18B | 19.86B | 19.97B | 16.05B |
| Cash Flow | Free Cash Flow | |||
| 1.97B | 1.60B | 1.47B | 3.37B | -143.00M | Operating Cash Flow |
| 4.34B | 4.43B | 4.59B | 5.87B | 2.24B | Investing Cash Flow |
| -53.00M | -3.28B | -2.09B | -2.80B | -2.58B | Financing Cash Flow |
| 6.28B | -1.36B | -1.80B | -3.36B | 883.00M |
Hewlett Packard Enterprise Technical Analysis
Negative
18.84
Price Trends
21.65
Negative
21.32
Negative
20.19
Negative
Market Momentum
-0.67
Positive
25.97
Positive
13.14
Positive
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 18.84 is below the 20-day moving average (MA) of 20.85, below the 50-day MA of 21.65, and below the 200-day MA of 20.19, indicating a bearish trend. The MACD of -0.67 indicates Positive momentum. The RSI at 25.97 is Positive, neither overbought nor oversold. The STOCH value of 13.14 is Positive, 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 32 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 (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $440.44B | 38.54 | 84.57% | 0.99% | 6.40% | 12.83% | |
74 Outperform | $251.67B | 27.72 | 20.18% | 2.52% | -5.34% | -30.57% | |
72 Outperform | $24.74B | 9.86 | 10.29% | 2.73% | 3.30% | 25.00% | |
71 Outperform | $19.03B | 17.31 | 114.27% | 2.15% | 5.46% | 23.49% | |
67 Neutral | $234.79B | 39.40 | 22.06% | 2.65% | 1.45% | -20.56% | |
66 Neutral | $66.01B | 14.74 | -179.12% | 1.86% | 7.99% | ― | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% |
* Technology Sector Average
Performance Comparison
HPE
Hewlett Packard Enterprise
18.84
1.22
6.92%
CSCO
Cisco Systems
63.26
15.81
33.32%
IBM
International Business Machines
253.21
67.51
36.35%
NTAP
NetApp
93.56
-7.34
-7.27%
ORCL
Oracle
157.47
47.72
43.48%
DELL
Dell Technologies
94.07
-21.94
-18.91%
Hewlett Packard Enterprise Earnings Call Summary
Earnings Call Date: Dec 5, 2024 | % Change Since: -12.45% | Next Earnings Date: Mar 6, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance with record revenue and cash flow, driven by significant growth in AI systems and Hybrid Cloud. However, challenges such as a notable order de-booking and margin pressures indicate areas of concern. The sentiment reflects a positive outlook with some caution due to specific operational challenges.Highlights
Record Quarterly Revenue
HPE generated record quarterly revenue of $8.5 billion, up 15% year-over-year, marking the first time revenue exceeded $8 billion.
AI Systems Revenue Growth
AI systems revenue grew 150% to $4.1 billion, with a sequential increase of 16% to $1.5 billion in Q4.
Hybrid Cloud Revenue Surge
Hybrid Cloud revenue grew 18% year-over-year and 21% sequentially to $1.6 billion, driven by Private Cloud and Alletra Storage MP.
Improved Financial Metrics
HPE achieved record free cash flow of $2.3 billion for fiscal year 2024, exceeding guidance, with a non-GAAP operating margin of 11.1% in Q4.
Growth in Intelligent Edge
Intelligent Edge achieved its third consecutive quarter of orders growth, with significant growth in data center networking.
Lowlights
AI Systems Order De-booking
A large AI systems order of $700 million was debooked due to concerns with a specific customer, highlighting volatility in order fulfillment.
Intelligent Edge Revenue Decline
Intelligent Edge revenue was down 20% year-over-year, despite order growth, due to a lower contribution from certain product segments.
Gross Margin Decline
Gross margin declined by 390 basis points year-over-year to 30.9%, affected by a higher contribution from AI systems and product mix changes.
Company Guidance
During the Hewlett Packard Enterprise (HPE) Q4 2024 earnings call, the company provided a robust guidance, highlighting several key metrics that underscore its strong performance and optimistic outlook. HPE reported a record quarterly revenue of $8.5 billion, representing a 15% year-over-year increase, and noted a significant contribution from HPE GreenLake and AI systems, with AI systems revenue alone reaching $1.5 billion, up 16% sequentially. The company also achieved a non-GAAP operating profit of $938 million, translating to an operating margin of over 11%, a 110 basis point sequential increase. HPE concluded fiscal year 2024 with a revenue growth exceeding 3%, surpassing $30 billion, and free cash flow reaching a record $2.3 billion, far exceeding its guidance of at least $1.9 billion. Looking forward, HPE anticipates continued growth, driven by its AI systems and Hybrid Cloud segments, and expects to close its acquisition of Juniper Networks in early 2025, further enhancing its portfolio and competitive position.Hewlett Packard Enterprise Corporate Events
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.
M&A TransactionsBusiness Operations and StrategyFinancial Disclosures
HPE Reports Record Q4 Revenue and Promising Outlook
Positive
Dec 5, 2024
Hewlett Packard Enterprise (HPE) reported exceptional financial results for the fourth quarter of fiscal 2024, showcasing record quarterly revenue and exceeding full-year commitments for revenue, EPS, and free cash flow. The company’s robust performance across hybrid cloud, AI, and networking, alongside a pending acquisition of Juniper Networks, positions it to capitalize on future market opportunities. HPE forecasts continued growth into 2025, driven by disciplined execution and rising customer demand.
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.