Hewlett Packard Enterprise Company may be undervalued with poor growth indicators, but the 17 analysts following the company give it an rating of hold. Their target prices range from $15.0 to $21.0 per share, for an average of $17.85. At today's price of $16.91, Hewlett Packard Enterprise Company is trading -5.27% away from its average target price, suggesting there is an analyst consensus of some upside potential for the stock.
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 large-cap Technology company is based in Spring, TX. Hewlett Packard Enterprise Company has provided a 2.9% dividend yield over the last 12 months.
Hewlett Packard Enterprise Company has a trailing twelve month P/E ratio of 11.0, compared to an average of 27.16 for the Technology sector. Considering its EPS guidance of $2.15, the company has a forward P/E ratio of 7.9.
The average compound growth rate of the company's last 6 years of reported earnings per share is -6.5% (the company doesn't issue forward EPS guidance). On this basis, the company's PEG ratio is -1.61, which indicates that its shares are overpriced.
On the other hand, the market is potentially undervaluing Hewlett Packard Enterprise Company in terms of its book value because its P/B ratio is 1.02. In comparison, the sector average P/B ratio is 6.23. The company's shares are currently -3.2% below their Graham number, indicating that its shares have a margin of safety.
The question is, why does Hewlett Packard Enterprise Company have a bad rating if it is apparently undervalued in terms of traditional metrics? One reason could be the company's disappointing rate of margin growth, which in the analysts' opinion, will continue in coming years.
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $30,852 | $29,135 | $26,982 | $27,784 | $28,496 | $29,655 |
| Gross Margins | 6% | 4% | -1% | 4% | 3% | 4% |
| Operating Margins | 7% | 5% | -1% | 13% | 3% | 4% |
| Net Margins | 7% | 4% | -1% | 12% | 3% | 4% |
| Net Income (MM) | $2,012 | $1,049 | -$322 | $3,427 | $868 | $1,079 |
| Net Interest Expense (MM) | -$274 | -$177 | $469 | $494 | $483 | $513 |
| Depreciation & Amort. (MM) | $2,576 | $2,535 | $2,625 | $2,597 | $2,480 | $2,579 |
| Earnings Per Share | $1.23 | $0.77 | -$0.25 | $2.58 | $0.66 | $0.82 |
| Diluted Shares (MM) | 1,553 | 1,366 | 1,294 | 1,330 | 1,322 | 1,294 |
| Free Cash Flow (MM) | $8 | $1,141 | -$143 | $3,369 | $1,471 | $1,468 |
| Capital Expenditures (MM) | $2,956 | $2,856 | $2,383 | $2,502 | $3,122 | $3,153 |
| Net Current Assets (MM) | -$13,294 | -$16,154 | -$14,906 | -$14,233 | -$13,648 | -$13,896 |
| Long Term Debt (MM) | $10,136 | $9,395 | $12,186 | $9,896 | $7,853 | $8,866 |
| Net Debt / EBITDA | 1.58 | 2.38 | 3.98 | 1.12 | 1.51 | 1.93 |
