Hewlett Packard Enterprise (HPE): limited revenue growth opportunities?

6:13 am ET, 28 Aug 2018

Hewlett Packard Enterprise Company (HPE) shares are trading at $16.53 prior to the earnings today. What's driving HPE's stock price? What's HPE's stock price forecast?

After its separation from HP Inc., HP Enterprise continued on the path of rapid divestitures, spinning out its enterprise services and software units along with other businesses and equity investments. This transformation has allowed the company to beef up its balance sheet and refocus its organization on the core traditional, on-premise hardware business, which consists of servers, storage, and networking--the mainstay categories of IT infrastructure.

However, traditional IT infrastructure is threatened by the growth of cloud computing. The recent meteoric growth of cloud-derived revenue of Amazon’s AWS and Microsoft’s Azure and stagnation and decline across all HPE segments underscore the challenges traditional IT vendors are facing. As IT departments accelerate the migration of their infrastructure to the cloud, HPE will be forced to compete, often times on price, with larger rivals such as Dell, Cisco, and Huawei for what is left of on-premise.

The key question investors will have today is, how much revenue growth will HPE drive?  HP Enterprise's second-quarter net revenue rose 10% year over year to $7.5 billion, which was largely viewed as a strong performance.  Management attributed the revenue growth to overall strong IT spend and the company's competitive pricing. 

What is the sentiment towards the HPE stock? Our technical analysis shows that:

  • The stock short-term sentiment (next 30 days) is trending negative;
  • The mid-term sentiment (3-6 months) is trending negative;
  • The long-term sentiment (9-12 months) is trending negative. 

Hewlett Packard Enterprise Company (HPE) forward P/E ratio is 10.38, and it’s low compared to its industry peers’ P/E ratios.

Hewlett Packard Enterprise Company (HPE) average analyst price target ($19.46) is 20.42% above its current price ($16.16).

For the latest price and information on Hewlett Packard Enterprise Company, please visit Finstead and search for "HPE price" or "HPE news".

Oracle (ORCL): What Is The Stock Forecast?

1:42 pm ET, 19 Mar 2018

Oracle strikes our attention as a stock that’s poised to beat the analyst estimate this earnings season.  The company is releasing its earnings this week, and investors are excited about the prospect of cloud growth at Oracle.  

Based on Finstead research, ORCL price target upside is 6.28%.

The reason why we’re seeing an excitement in the investment community is, Oracle is indicating favorable earnings as of lately, which is generally a precursor to an earnings beat. The analysts are raising estimates right before earnings, which is a pretty good indicator of some favorable trends going on for Oracle.

So the question is, how high can the stock go?  Based on Finstead, the average price target is $55.55. 

The optimists are saying that the price should be in the $60s.  

And Oracle valuation ratios seem pretty low.  Only IBM and HPE are valued below Oracle, based on forward P/E ratio. 

What are your thoughts on upcoming Oracle earnings?

Hewlett Packard Enterprise Company (HPE) Stock Guide

Updated at: 12:16 am ET, 18 Sep 2020

Before we start: if you're looking for HPE stock price, you can quickly find it out by visiting Finny and typing "HPE quote". If you're looking for a quick scoop on HPE stock (chart, price target, market cap, news and buy or sell analysis), go to Finny and look for "HPE". You'll get all this info in one place. Or you can just type "HPE news" to get the latest stock news.

Looking to buy or sell Hewlett Packard Enterprise Company (HPE)? Interested in getting the full scoop on HPE, including earnings and dividends, stock forecast, buy or sell analysis and key stats? If so, you came to the right place.

In this HPE stock guide, we'll address key questions about HPE, above and beyond what you can find on Yahoo Finance, Zacks, MarketWatch or Morningstar.

Here is what you'll be able to find in this guide:

Earnings and Dividends: earnings, earnings date, dividend rate and dividend yield;
Analyst Predictions: stock forecast and analyst ratings;
Analysis: Finny Score and buy or sell analysis;
Key Stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio, industry, sector, and number of employees.

And here is the list of questions we'll answer:
1. What are HPE earnings?
2. What is HPE dividend?
3. What is HPE dividend yield?
4. What is HPE stock forecast (i.e., prediction)?
5. HPE buy or sell? What is HPE Finny Score?
6. What are the reasons to buy HPE? Why should I buy HPE stock?
7. What are the reasons to sell HPE? Why should I sell HPE stock?
8. What are HPE key stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

So let's start. Scroll down to the question that interests you the most.

Earnings and Dividends

1. What are HPE earnings?

HPE trailing 12-month earnings per share (EPS) is $0.00.

2. What is HPE dividend?

HPE forward dividend is $0.48.

3. What is HPE dividend yield?

HPE forward dividend yield is 4.88%.

Analyst Predictions

4. What is HPE stock forecast (i.e., prediction)?

Based on HPE analyst price targets, HPE stock forecast is $11.26 (for a year from now). That means the average analyst price target for HPE stock is $11.26. The prediction is based on 25 analyst estimates.

The low price target for HPE is $8.50, while the high price target is $15.00.

HPE analyst rating is Hold.


5. HPE buy or sell? What is HPE Finny Score?

#{finnyScore:64}Our quantitative analysis shows 7 reasons to buy and 4 reasons to sell HPE, resulting in Finny Score of 64.

6. What are the reasons to buy HPE? Why should I buy HPE stock?

Here are the reasons to buy HPE stock:

  • Despite shifting workloads to the public cloud, certain limitations, such as security, control, and regulatory demands, could keep some storage workloads on-premises, which bodes well for HP Enterprise’s customer retention.
  • HP Enterprise’s spin-off of its Enterprise Services business will allow HP Enterprise to increase its focus on its more profitable enterprise hardware business.
  • HP Enterprise’s ongoing cost-improvement efforts will allow the company to maintain its profitability profile in the face of stagnant sales growth.
  • The latest forecast for worldwide IT spending by Gartner gave some optimism about Hewlett Packard Enterprise’s near-term performance. The research firm expects worldwide IT spending to grow 4.5% to $3.7 trillion in 2018. According to John-David Lovelock, research vice president at Gartner, there are 10 markets which is driving digital transformation thereby boosting overall IT spending.
  • After the split from its parent company, Hewlett Packard Enterprise has made it clear that it will focus on restructuring and realigning its businesses to drive long-term sustainable growth and improvise margins. In keeping with this effort, the company divested its stake in Mphasis Limited, an IT service provider in Bangalore, India, in 2016. Apart from this, the company has spun-off its struggling IT services segment – Enterprise Services and merged the same with Computer Sciences Corporation during second- quarter fiscal 2017.
  • The spin-off of Enterprise Services business and merger of the same with Computer Sciences has opened new avenues of growth for the combined entity as well as has unlocked value for Hewlett Packard Enterprise’s shareholders. The deal has combined Computer Sciences’ strength in insurance, healthcare and financial services with Hewlett Packard Enterprise’s expertise in fields such as transportation, pharma, technology, media and telecom. Post merger, the combined entity has become the world’s second-largest IT services company after Accenture plc, generating revenues of approximately $25 billion annually.
  • We consider that divestment of Software division is in best interest of Hewlett Packard Enterprise. The company has sold this division to British firm Micro Focus in a cash-stock deal worth $8.8 billion. Hewlett Packard Enterprise has received $2.5 billion in cash and the remaining consideration in the form of a 50.1% stake in the combined company.
  • Since its split from HP Inc., Hewlett Packard Enterprise has been trying to focus more on high margin hybrid IT models that leverage on-premises and cloud computing power. This is evident from the acquisitions of SimpliVity, Cloud Cruiser, Nimble and Cloud Technology partners. The acquisition of SimpliVity has strengthened Hewlett Packard Enterprise’s capabilities in the hyper- converged enterprise storage and server equipment.
  • Hewlett Packard Enterprise views Industrial Internet of Things (IoT) as the next major market as evident from its recent partnership with GE Digital, a unit of General Electric Company, to develop products for Industrial IoT. The two companies entered into a strategic agreement in June 2016, under which Hewlett Packard Enterprise’s IoT technologies will be integrated with GE's industrial expertise and its Predix platform to bring digital know-how to the industry sector. GE Digital’s Predix is a cloud-based Platform-as-a-Service (PaaS) solution.
  • Hewlett Packard Enterprise has a strong balance sheet. As of January 31, 2018, the company had $7.7 billion in cash and cash equivalents. Moreover, during the quarter, Hewlett Packard Enterprise generated operating cash flow of $142 million. Strong balance sheet and cash flows help organizations to pursue strategic acquisitions and invest in growth initiatives.
  • Hewlett Packard Enterprise’s strong operating cash flow has helped it to return cash through regular quarterly dividend payment and share repurchases. During fiscal 2017, Hewlett Packard Enterprise returned $3 billion to its shareholders, of which $2.556 billion was through share repurchases and the remaining through dividend payments.
  • HPE forward dividend yield is 4.88%, higher than the industry (0.36%) and sector (0.26%) forward dividend yields. See HPE forward dividend chart.
  • HPE forward P/E ratio is 6.44, which is low compared to its industry peers’ P/E ratios. See HPE forward P/E ratio chart.
  • HPE Price/Book ratio is 0.75, which is low compared to its industry peers’ P/B ratios. See HPE forward Price/Book ratio chart.
  • HPE Price/Sales ratio is 0.45, which is low compared to its industry peers’ P/S ratios. See HPE forward Price/Sales ratio chart.
  • HPE average analyst price target ($11.26) is above its current price ($9.63). See HPE price target chart.
  • HPE cash to debt ratio is 0.44, higher than the average industry (0.18) and sector (0.17) cash to debt ratio. See HPE cash to debt chart.
  • HPE Enterprise Value/Revenue multiple is 0.87, which is low compared to its industry peers’ Enterprise Value/Revenue multiples. See HPE Enterprise Value/Revenue chart.

7. What are the reasons to sell HPE? Why should I sell HPE stock?

Let's look at the reasons to sell HPE stock (i.e., the bear case):

  • HP Enterprise’s infrastructure products for on-premises data centers face the persistent threat of workloads being shifted to public cloud providers, such as Amazon Web Services.
  • We believe that IT managers are striving to extend the useful lives of their on-premises infrastructure equipment, which could also weigh on HP Enterprise’s growth.
  • The high potential for price wars in servers could limit the company’s capacity to invest in R&D and its ability to continue pursuing strategic acquisitions.
  • The acquisition of EMC by Dell has posed new challenges for Hewlett Packard Enterprise. With the acquisition, Dell has become one of the major players in the cloud services and data storage market. EMC Corporation (stylized as EMC) offers data storage, information security, virtualization, analytics, cloud computing and other products and services that enable businesses to store, manage, protect, and analyze data.
  • Hewlett Packard Enterprise’s market share and revenues necessarily depend on client relationships and the number of contracts it secures. This, along with the limited scope for product differentiation, makes the renegotiation of large contracts extremely important. Competition from bigger companies is a major concern.
  • Usually, over 60% of Hewlett Packard Enterprise’s total revenues come from businesses outside the United States. Thus, an economic condition, which impacts foreign currency exchange rates results in transaction exposure, leading to profit fluctuation. The stronger dollar had a significant negative impact of 80 basis points on its last quarter’s revenues.
  • HPE quarterly revenue growth was -5.60%, lower than the industry and sector average revenue growth (0.91% and 0.89%, respectively). See HPE revenue growth chart.
  • HPE profitability is declining. The YoY profit margin change was -5.11 percentage points. See HPE profitability chart.
  • HPE PEG ratio (P/E adjusted for growth) is 5.91, which is high compared to its industry peers’ PEG ratios. See HPE PEG chart.
  • HPE short interest (days to cover the shorts) ratio is 3.04. The stock garners more short interest than the average industry, sector or S&P 500 stock. See HPE short interest ratio chart.

Key Stats

8. What are HPE key stats : revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

Let's look at the key statistics for HPE:

Metrics HPE
Price $9.49
Average Price Target / Upside $11.26 / 18.65%
Average Analyst Rating Hold
Forward Dividend Yield 4.88%
Industry Communication Equipment
Sector Technology
Number of Employees 60,000
Market Cap $12.18B
Forward P/E Ratio 6.44
Price/Book Ratio 0.45
Revenue (TTM) $26.99B
YoY Quarterly Revenue Growth -5.60%
Profit Margin 0.00%

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