Assessing Hewlett Packard Enterprise Company’s (NYSE:HPE) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess HPE’s recent performance announced on 31 July 2017 and evaluate these figures to its long-term trend and industry movements. Check out our latest analysis for Hewlett Packard Enterprise
Despite a decline, did HPE underperform the long-term trend and the industry?
I use data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This blend enables me to assess different companies on a similar basis, using the latest information. Hewlett Packard Enterprise’s most recent bottom-line is $36M, which, in comparison to last year’s figure, has plunged by a significant -99.20%. Given that these figures may be relatively short-term thinking, I have estimated an annualized five-year value for Hewlett Packard Enterprise’s net income, which stands at $998M. This doesn’t seem to paint a better picture, as earnings seem to have consistently been falling over the longer term.
Why is this? Well, let’s take a look at what’s transpiring with margins and whether the entire industry is facing the same headwind. In the last couple of years, revenue growth has fallen behind earnings, which suggests that Hewlett Packard Enterprise’s bottom line has been driven by unsustainable cost-reductions. Inspecting growth from a sector-level, the US technology hardware, storage and peripherals industry has been growing its average earnings by double-digit 12.55% over the prior twelve months, . This is a change from a volatile drop of -2.07% in the previous few years. This means that, in the recent industry expansion, Hewlett Packard Enterprise has not been able to gain as much as its average peer.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Typically companies that face an extended period of reduction in earnings are going through some sort of reinvestment phase with the aim of keeping up with the recent industry growth and disruption. I recommend you continue to research Hewlett Packard Enterprise to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for HPE’s future growth? Take a look at our free research report of analyst consensus for HPE’s outlook.
2. Financial Health: Is HPE’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.