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Are Investors Undervaluing Hewlett Packard Enterprise (HPE) Right Now?

Zacks Equity Research

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

Hewlett Packard Enterprise (HPE) is a stock many investors are watching right now. HPE is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 7.99, which compares to its industry's average of 10.46. Over the last 12 months, HPE's Forward P/E has been as high as 10.42 and as low as 7.23, with a median of 8.92.

HPE is also sporting a PEG ratio of 1.21. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. HPE's industry has an average PEG of 1.71 right now. Over the past 52 weeks, HPE's PEG has been as high as 1.93 and as low as 0.83, with a median of 1.31.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. HPE has a P/S ratio of 0.66. This compares to its industry's average P/S of 1.81.

Finally, investors should note that HPE has a P/CF ratio of 7.64. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 10.36. Within the past 12 months, HPE's P/CF has been as high as 8.32 and as low as 3.84, with a median of 6.79.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Hewlett Packard Enterprise is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, HPE feels like a great value stock at the moment.


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