Hewlett Packard Enterprise (HPE) AI Stock Analysis

• Market Cap: $23.32B
• Dividend Yield: 2.93%
• Average Volume (3M): 20.36M
• Price to Earnings (P/E): 8.8
• Beta (1Y): 1.61
• Revenue Growth: 10.93%
• EPS Growth: 43.19%
• Country: US
• Employees: 61,000
• Sector: Technology
• Sector Strength: 76
• Industry: Communication Equipment
• EPS (TTM): 0.49
• Shares Outstanding: 1,313,578,200
• 10 Day Avg. Volume: 14,636,048
• 30 Day Avg. Volume: 20,361,467
• PEG Ratio: 1.01
• Price to Book (P/B): 0.88
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 13.46
• Enterprise Value/Market Cap: 1.14
• Enterprise Value/Revenue: 0.22
• Enterprise Value/Gross Profit: 2.77
• Enterprise Value/Ebitda: 1.35
• 1Y Price Target: $17.56
• Price Target Upside: -1.07% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 9

Hewlett Packard Enterprise's strong financial performance and attractive valuation are key strengths. The recent earnings call indicates promising growth potential, particularly in AI and Intelligent Edge, but also highlights challenges such as server segment pressures and margin declines. Technical analysis shows mixed signals, requiring cautious monitoring. Overall, HPE appears to be a stable investment with opportunities for growth, albeit with some competitive and cost management risks.

Positive Factors

Operational Improvements

Operational improvements are possible, especially after recent reorganization announcements aimed at optimizing costs.

Synergies

There is potential for significant synergies if the JNPR deal goes through, enhancing value creation.

Valuation

The recent news of a $1.5bn stake in HPE by activist investor Elliott Management suggests potential value creation opportunities.

Negative Factors

AI Positioning

HPE's positioning in AI lags behind competitors, as seen in AI server sales compared to peers like Dell.

Shareholder Actions

The pending acquisition of Juniper limits HPE's ability to carry out more shareholder-friendly actions like share repurchases.

Hewlett Packard Enterprise Business Overview & Revenue Model

Company Description

Hewlett Packard Enterprise Company provides solutions that allow customers to capture, analyze, and act upon data seamlessly in the Americas, Europe, the Middle East, Africa, the Asia Pacific, and Japan. The company offers general purpose servers for multi-workload computing and workload-optimized servers; HPE ProLiant rack and tower servers; HPE BladeSystem and HPE Synergy; and solutions for secondary workloads and traditional tape, storage networking, and disk products, such as HPE Modular Storage Arrays and HPE XP. It also offers HPE Apollo and Cray products; and HPE Superdome Flex, HPE Nonstop, HPE Integrity, and HPE Edgeline products. In addition, the company provides HPE Aruba product portfolio that includes wired and wireless local area network hardware products, such as Wi-Fi access points, switches, routers, and sensors; HPE Aruba software and services comprising cloud-based management, network management, network access control, analytics and assurance, and location; and professional and support services, as well as as-a-service and consumption models for the intelligent edge portfolio of products. Further, it offers various leasing, financing, IT consumption, and utility programs and asset management services for customers to facilitate technology deployment models and the acquisition of complete IT solutions, including hardware, software, and services from Hewlett Packard Enterprise and others. Additionally, the company invests in communications and media solutions. It has a partnership with Striim, Inc. to offer high performance and mission-critical solutions with real-time analytics. It serves commercial and large enterprise groups, such as business and public sector enterprises; and through various partners comprising resellers, distribution partners, original equipment manufacturers, independent software vendors, systems integrators, and advisory firms. Hewlett Packard Enterprise Company was founded in 1939 and is headquartered in Houston, Texas.

How the Company Makes Money

Hewlett Packard Enterprise makes money through a diversified revenue model that includes the sale of hardware, software, and services. A significant portion of its revenue comes from its Hybrid IT segment, which includes servers, storage, and data center networking solutions. HPE also generates income through its Intelligent Edge segment, offering edge computing and IoT solutions, and its Financial Services segment, which provides leasing and financial management services. Additionally, HPE capitalizes on strategic partnerships with other technology firms and service providers, enhancing its product offerings and expanding its market reach. The company also offers subscription-based services and cloud solutions, creating recurring revenue streams that contribute to its financial performance.

Hewlett Packard Enterprise Financial Statement Overview

Summary

Hewlett Packard Enterprise demonstrates solid financial performance with consistent revenue growth and profitability. The balance sheet reflects a stable financial position with manageable leverage and good equity returns. Cash flow generation is strong, supporting operational needs and growth initiatives. While the company shows resilience and efficiency, monitoring cost management and enhancing cash flow efficiency could further strengthen its financial standing.

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.

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.

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.

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
2.79B	2.58B	2.02B	868.00M	3.43B	-322.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
13.43B	14.85B	4.27B	4.16B	4.00B	4.23B
	Total Assets
70.33B	71.26B	57.15B	57.12B	57.70B	54.02B
	Total Debt
17.88B	18.25B	13.52B	12.46B	13.45B	15.94B
	Net Debt
4.45B	3.40B	9.24B	8.30B	9.45B	11.71B
	Total Liabilities
45.05B	46.38B	35.91B	37.21B	37.68B	37.92B
	Stockholders Equity
25.22B	24.82B	21.18B	19.86B	19.97B	16.05B
Cash Flow		Free Cash Flow
1.65B	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

• Technical Analysis Sentiment: Neutral
• Last Price: 17.75
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HPE, the sentiment is Neutral. The current price of 17.75 is above the 20-day moving average (MA) of 16.62, above the 50-day MA of 15.70, and below the 200-day MA of 19.06, indicating a neutral trend. The MACD of 0.56 indicates Negative momentum. The RSI at 64.25 is Neutral, neither overbought nor oversold. The STOCH value of 78.05 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for HPE.

Hewlett Packard Enterprise Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CSCO	78 Outperform	$253.10B	26.10	21.36%	2.53%	0.47%	-17.77%
HPE	70 Outperform	$23.32B	8.78	12.09%	2.93%	10.93%	43.19%
JNPR	68 Neutral	$12.05B	34.45	7.58%	2.44%	-2.56%	52.05%
ERIC	68 Neutral	$28.42B	180.60	1.67%	2.13%	-2.08%	―
NOK	64 Neutral	$26.91B	34.60	5.70%	1.94%	-9.96%	-6.83%
UI	63 Neutral	$26.38B	48.07	237.68%	0.55%	21.43%	56.87%
Sector *	60 Neutral	$11.59B	10.39	-7.23%	2.94%	7.46%	-10.76%

Hewlett Packard Enterprise Corporate Events

Hewlett Packard Enterprise Declares Dividend for Preferred Stock

On April 30, 2025, Hewlett Packard Enterprise‘s Board of Directors approved a cash dividend of $0.953125 per share for its Series C Mandatory Convertible Preferred Stock, payable on June 1, 2025. This decision reflects the company’s financial strategy and commitment to returning value to shareholders, with implications for investor confidence and market positioning.

Spark’s Take on HPE Stock

According to Spark, TipRanks’ AI Analyst, HPE is a Neutral.

Hewlett Packard Enterprise’s stock demonstrates a solid financial foundation with strong revenue growth and profitability. The stock’s valuation is attractive, indicating it may be undervalued. However, technical analysis suggests bearish trends, and challenges in the server segment pose risks to future performance. The company’s optimistic guidance and strategic initiatives in AI and GreenLake provide potential for long-term growth, but margin pressures and competitive challenges need close monitoring.

To see Spark’s full report on HPE stock, click here.

Hewlett Packard Enterprise Approves Key Amendments at Annual Meeting

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.