HPE Leaps 17% In One Month, Time To Buy The Stock?

We believe there is a near-equal mix of good and bad in HPE stock given its overall Moderate operating performance and financial condition. Considering stock’s Low valuation we think it is Attractive. Here is our multi-factor assessment.

But no matter how attractive, investing in a single stock carries high risk. Trefis High Quality Portfolio and is designed to reduce stock-specific risk while giving upside exposure

Let’s get into details of each of the assessed factors but before that, for quick background: With $31 Bil in market cap, Hewlett Packard Enterprise provides data solutions, multi-workload servers, and a portfolio of wired and wireless networking hardware, including Wi-Fi access points, switches, routers, and sensors.

[1] Valuation Looks Low

This table highlights how HPE is valued vs broader market. For more details see: HPE Valuation Ratios

[2] Growth Is Strong

• Hewlett Packard Enterprise has seen its top line grow at an average rate of 5.9% over the last 3 years
• Its revenues have grown 14% from $29 Bil to $33 Bil in the last 12 months
• Also, its quarterly revenues grew 18.5% to $9.1 Bil in the most recent quarter from $7.7 Bil a year ago.

This table highlights how HPE is growing vs broader market. For more details see: HPE Revenue Comparison

[3] Profitability Appears Very Weak

• HPE last 12 month operating income was $2.0 Bil representing operating margin of 6.2%
• With cash flow margin of 7.5%, it generated nearly $2.5 Bil in operating cash flow over this period
• For the same period, HPE generated nearly $1.2 Bil in net income, suggesting net margin of about 3.8%

This table highlights how HPE profitability vs broader market. For more details see: HPE Operating Income Comparison

[4] Financial Stability Looks Moderate

• HPE Debt was $24 Bil at the end of the most recent quarter, while its current Market Cap is $31 Bil. This implies Debt-to-Equity Ratio of 75.9%
• HPE Cash (including cash equivalents) makes up $4.6 Bil of $77 Bil in total Assets. This yields a Cash-to-Assets Ratio of 5.9%

[4] Downturn Resilience Is Weak

HPE has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• HPE stock fell 31.8% from a high of $17.56 on 29 March 2022 to $11.98 on 30 September 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 16 June 2023
• Since then, the stock increased to a high of $24.42 on 22 January 2025 , and currently trades at $23.52

 
2020 Covid Pandemic

• HPE stock fell 51.6% from a high of $16.17 on 2 January 2020 to $7.83 on 23 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 23 April 2021

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read HPE Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – S&P 500, Russell, and S&P midcap. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.