Hewlett Packard Enterprise (HPE) AI Stock Analysis

• Market Cap: $19.05B
• Dividend Yield: 4.16%
• Average Volume (3M): 26.27M
• Price to Earnings (P/E): 7.2
• Beta (1Y): 1.68
• Revenue Growth: 10.93%
• EPS Growth: 43.19%
• Country: US
• Employees: 61,000
• Sector: Technology
• Sector Strength: 40
• Industry: Communication Equipment
• EPS (TTM): 2.02
• Shares Outstanding: 1,313,578,200
• 10 Day Avg. Volume: 27,431,522
• 30 Day Avg. Volume: 26,270,931
• PEG Ratio: 0.17
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.68
• Price to Cash Flow (P/CF): -13.50
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $17.56
• Price Target Upside: 27.80% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 9

Hewlett Packard Enterprise shows strong financial fundamentals and an attractive valuation, supported by robust revenue growth and profitability. However, the technical indicators suggest caution due to bearish trends, and challenges in server margins pose risks. The positive earnings call outlook helps balance these concerns.

Positive Factors

AI Order Growth

HPE cumulative AI systems orders increased to $8.3bn from $6.7bn in the previous quarter.

As-a-Service Success

GreenLake has been a success for HPE, allowing customers to consume compute on an as-needed basis and achieving an annual run rate of over $2.0b.

Networking Revenue Growth

Intelligent Edge, specifically Aruba Networking, was a positive area with revenue up 2% quarter over quarter and operating profit increasing significantly.

Negative Factors

Revenue and EPS Miss

HPE's 2Q25 revenue guidance of $7.4b was $534m below street expectations, with an EPS miss as well.

Server Pricing Competition

The company's core servers are facing significant pricing competition, and HPE did not price correctly.

Tariff Impact

New tariffs, meaningfully higher than expected, were introduced, putting HPE in a more challenged position.

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 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.

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
2.77B	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

• Technical Analysis Sentiment: Negative
• Last Price: 13.74
• 50DMA: Negative
• 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 Negative. The current price of 13.74 is below the 20-day moving average (MA) of 15.20, below the 50-day MA of 17.84, and below the 200-day MA of 19.56, 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 Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CSCO	75 Outperform	$216.46B	23.84	20.02%	2.75%	-5.34%	-30.57%
NOK	75 Outperform	$24.49B	20.00	8.27%	2.17%	-12.68%	90.73%
ERIC	73 Outperform	$22.64B	12,050.00	0.15%	2.39%	-5.59%	―
UI	71 Outperform	$18.79B	42.23	323.87%	0.85%	14.59%	19.51%
HPE	67 Neutral	$19.05B	7.17	12.09%	4.16%	10.93%	43.19%
JNPR	60 Neutral	$11.71B	40.85	6.21%	2.59%	-8.82%	-10.01%
Sector *	57 Neutral	$20.24B	9.51	-13.28%	2.72%	5.43%	-24.54%

Hewlett Packard Enterprise Corporate Events

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.

HPE and Juniper Oppose DOJ Lawsuit on Acquisition

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.

Hewlett Packard Enterprise Declares Series C Dividend

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.