HPE 21.26 (-0.79%)
US42824C1099HardwareCommunication Equipment

Last update on 2024-06-06

Hewlett Packard Enterprise (HPE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 8/9)

Detailed Piotroski F-Score analysis of Hewlett Packard Enterprise (HPE) for 2023. Discover financial health & investment potential with a score of 8/9.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 8

We're running Hewlett Packard Enterprise (HPE) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
1
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
1
Current Ratio is growing?
0
Number of shares not diluted?
1
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
1

Hewlett Packard Enterprise (HPE) was evaluated using the Piotroski F-Score, which measures the financial health of a company. HPE scored an 8 out of 9, indicating strong financial standing. The analysis looked at profitability, liquidity, and operating efficiency. HPE has shown positive trends in net income, cash flow, return on assets (ROA), operating cash flow, gross margin, and asset turnover ratio. However, there were concerns with the declining current ratio, even though the leverage ratio has shown a minor improvement.

Insights for Value Investors Seeking Stable Income

Given its high Piotroski score of 8, Hewlett Packard Enterprise (HPE) appears to be a strong investment opportunity. The company has demonstrated solid profitability and operational efficiency. Investors might want to pay attention to the slightly concerning current ratio and should keep an eye on other long-term financials. Generally, it could be a good idea to consider investing in HPE given its robust financial health and the potential for continued growth opportunities.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Hewlett Packard Enterprise (HPE)

Company has a positive net income?

Net income is a critical measure of a company's profitability. Consistently positive net income indicates robust financial health.

Historical Net Income of Hewlett Packard Enterprise (HPE)

For Hewlett Packard Enterprise (HPE), the net income for 2023 stands at $2.025 billion, which is positive and thus adds 1 point to the Piotroski score. Historically, HPE's net income has fluctuated significantly, with considerable losses in 2012 (-$14.761 billion) and 2020 (-$322 million). However, HPE has shown a strong rebound in recent years, particularly in 2021 ($3.427 billion) and 2023 ($2.025 billion), signaling a recovery and a robust financial performance. These positive trends bode well for investors.

Company has a positive cash flow?

Cash Flow from Operations (CFO) assesses financial strength and liquidity. Positive CFO indicates earnings quality and the ability to sustain growth.

Historical Operating Cash Flow of Hewlett Packard Enterprise (HPE)

In 2023, Hewlett Packard Enterprise (HPE) reported a positive Cash Flow from Operations (CFO) of $4.428 billion. This trend is favorable, earning the company 1 point in the Piotroski analysis. Over the past decade, HPE has experienced fluctuations in CFO, with some particularly strong years, like 2013 at $8.739 billion and weaker years, like 2017 at $0.889 billion. The stability in recent years implies reinforced operational efficiency and liquidity position, underpinning HPE's ability to fund its operations, settle debts, and pursue growth opportunities without relying heavily on external financing.

Return on Assets (ROA) are growing?

Change in ROA: Compare the ROA of 0.0354 in 2023 with the ROA of 0.0151 in 2022. If the ROA increased in 2023 add 1 point if not set it to 0.

Historical change in Return on Assets (ROA) of Hewlett Packard Enterprise (HPE)

Hewlett Packard Enterprise (HPE) has seen an increase in its Return on Assets (ROA) from 0.0151 in 2022 to 0.0354 in 2023. This signifies a positive trend as ROA is a key measure of a company's profitability relative to its total assets. An improved ROA points towards more efficient utilization of assets to generate earnings. Hence, a point is added in this criterion for HPE. This increase is remarkable, particularly in a challenging economic landscape, although it should be noted that the company's ROA is still significantly lower compared to the industry median, which stands at 0.3903 in 2023. Despite this divergence, the upward trend is a positive signal for investors.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income measures the quality of earnings. It indicates that the company is generating more cash than the profits it reports, which can be a positive sign of financial health.

Historical accruals of Hewlett Packard Enterprise (HPE)

In 2023, Hewlett Packard Enterprise reported an Operating Cash Flow of $4,428,000,000 compared to a Net Income of $2,025,000,000. The fact that the Operating Cash Flow is more than double the Net Income is a positive sign, suggesting robust cash generation relative to the reported profits. Historically, the company has shown varying levels of Operating Cash Flow and Net Income, with some inconsistencies such as negative Net Income in 2012 and 2020. Overall, the higher Operating Cash Flow in 2023 earns a point according to this criterion.

Liquidity of Hewlett Packard Enterprise (HPE)

Leverage is declining?

Change in Leverage refers to alterations in a company's debt level, measured by leverage ratios, which indicate its financial stability and risk profile.

Historical leverage of Hewlett Packard Enterprise (HPE)

The leverage ratio for Hewlett Packard Enterprise (HPE) has increased from 0.1524 in 2022 to 0.1479 in 2023, contrary to the observation of an increase. This minor decrease in leverage, although positive, doesn't reflect a strongly improving trend given its relatively stable fluctuation over the past twelve years. In the historical context, HPE's leverage has seen larger variances, such as a significant increase to 0.2422 in 2020 and a decrease to 0.1524 in 2022. Therefore, while there is a decrease in 2023, it should be weighed cautiously as part of a broader and more nuanced long-term review.

Current Ratio is growing?

A higher current ratio indicates better short-term liquidity, showing the company can more easily cover its short-term obligations.

Historical Current Ratio of Hewlett Packard Enterprise (HPE)

From 2022 to 2023, Hewlett Packard Enterprise's (HPE) current ratio decreased slightly from 0.8849 to 0.8659. Although the decrease is marginal, HPE's current ratio remains significantly below the industry median of 1.8276 in 2023. This trend is concerning since a lower current ratio indicates potential liquidity issues. Therefore, according to Piotroski analysis, HPE receives 0 points for the current ratio criterion.

Number of shares not diluted?

Describe why it’s important to consider the change in outstanding shares when evaluating Hewlett Packard Enterprise (HPE). Highlight how it impacts shareholder value.

Historical outstanding shares of Hewlett Packard Enterprise (HPE)

Hewlett Packard Enterprise (HPE) has seen a decrease in outstanding shares from 1,303,000,000 in 2022 to 1,299,000,000 in 2023. This decrease of 4,000,000 shares (or about 0.31%) is a positive sign. It suggests that the company may be engaging in shareholder-friendly practices such as share buybacks, which can enhance shareholder value by increasing the ownership stake of existing shareholders. Over the last two decades, HPE’s outstanding shares have generally been on a decline, which is often considered a positive trend as it can improve earnings per share (EPS) and signals a strong balance sheet and cash flow status. Historically, the shares outstanding have decreased steadily from 1,869,000,000 in 2012. This also reflects positively on management’s confidence in the company’s future growth prospects.

Operating of Hewlett Packard Enterprise (HPE)

Cross Margin is growing?

Evaluating the change in gross margin over time is crucial as it underscores a company's operational efficiency and ability to manage production costs relative to revenues.

Historical gross margin of Hewlett Packard Enterprise (HPE)

The Gross Margin for Hewlett Packard Enterprise (HPE) increased from 0.3336 in 2022 to 0.3514 in 2023. This notable increase in gross margin is a positive indicator and warrants adding 1 point according to the Piotroski criterion. When compared to the industry median, where the gross margin has actually declined from 0.424 in 2022 to 0.3903 in 2023, HPE’s improvement becomes even more significant. Over the years, from 2012’s gross margin of 0.2768 to the present 0.3514, HPE has shown a consistent enhancement in this metric, contrasting the fluctuating nature of the industry median. This continual improvement can be attributed to HPE's strong cost management and possibly successful strategies in market positioning or production optimization.

Asset Turnover Ratio is growing?

Asset Turnover measures the efficiency of a company's use of its assets to generate sales revenue.

Historical asset turnover ratio of Hewlett Packard Enterprise (HPE)

The Asset Turnover ratio for Hewlett Packard Enterprise (HPE) has increased from 0.4964 in 2022 to 0.5099 in 2023. This indicates a positive trend and thus adds 1 point to the Piotroski F-Score. Historically, HPE's Asset Turnover ratio has experienced fluctuations, reaching as high as 1.6684 in 2013 and as low as 0.4093 in 2017. The latest uptick suggests improved efficiency in asset utilization and an upward trajectory over the past fiscal year, which is a favorable indicator.


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