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1. Company Snapshot

1.a. Company Description

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 company offers general purpose servers for multi-workload computing and workload-optimized servers; HPE ProLiant rack and tower servers; HPE BladeSystem and HPE Synergy; and solutions for secondary workloads and traditional tape, storage networking, and disk products, such as HPE Modular Storage Arrays and HPE XP.It also offers HPE Apollo and Cray products; and HPE Superdome Flex, HPE Nonstop, HPE Integrity, and HPE Edgeline products.


In addition, the company provides HPE Aruba product portfolio that includes wired and wireless local area network hardware products, such as Wi-Fi access points, switches, routers, and sensors; HPE Aruba software and services comprising cloud-based management, network management, network access control, analytics and assurance, and location; and professional and support services, as well as as-a-service and consumption models for the intelligent edge portfolio of products.Further, it offers various leasing, financing, IT consumption, and utility programs and asset management services for customers to facilitate technology deployment models and the acquisition of complete IT solutions, including hardware, software, and services from Hewlett Packard Enterprise and others.Additionally, the company invests in communications and media solutions.


It has a partnership with Striim, Inc.to offer high performance and mission-critical solutions with real-time analytics.It serves commercial and large enterprise groups, such as business and public sector enterprises; and through various partners comprising resellers, distribution partners, original equipment manufacturers, independent software vendors, systems integrators, and advisory firms.


Hewlett Packard Enterprise Company was founded in 1939 and is headquartered in Houston, Texas.

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1.b. Last Insights on HPE

Hewlett Packard Enterprise's recent performance was negatively impacted by weak guidance for fiscal 2026, with projected revenue growth of 5-10%, below analysts' estimates. The company's server revenue declined 5% year-over-year, and operating profit margins decreased. Integration costs from the Juniper Networks acquisition and delayed enterprise spending added pressure. Despite areas of growth, particularly in AI-native networking and cloud portfolio expansions, the outlook for Q4 faced challenges. The company reported Q4 earnings of $0.62 per share, beating estimates, but forecast weak quarterly revenue.

1.c. Company Highlights

2. HPE's Q3 2025 Earnings: A Strong Performance Driven by AI and Networking

HPE reported a revenue of $9.1 billion, up 18% YoY, with a non-GAAP diluted EPS of $0.44, beating estimates of $0.417. The company's networking segment saw a significant surge of 54% YoY to $1.7 billion, driven by the Juniper acquisition. Server revenue hit a record $4.9 billion, with AI systems revenue at $1.6 billion. Hybrid cloud revenue rose 9% YoY to $1.5 billion, with ARR up 75%.

Publication Date: Sep -07

📋 Highlights
  • Juniper Integration Progress: Networking revenue surged 54% YoY to $1.7B (HPE+Juniper) with $360M operating profit (20.8% margin), driven by AI and hybrid cloud demand. SPAR Austria and service providers highlight AI adoption. $600M in Juniper synergies expected over three years.
  • Server Dominance: Recorded $4.9B revenue (+16% YoY), with AI systems revenue at $1.6B (GB200 deal), including $300M+ in AI orders. Server margin improved to 6.4% despite higher AI mix, with 14-16% FY2025 revenue growth guidance.
  • Hybrid Cloud Growth: Revenue rose 9% YoY to $1.5B, with ARR up 75% (40% organically). GreenLake hybrid cloud ops software and Mist AgenTiC AI networking accelerated adoption. 9% operating margin achieved despite integration costs.
  • Financial Resilience: Non-GAAP EPS of $0.44 (top of guidance), $719M free cash flow (down from $963M Q2 due to inventory optimization). Debt-to-EBITDA improved to 2.5x, with $1.8B net debt. Catalyst program targets $350M annual savings by 2027.
  • Future Strategy: AI roadmap focuses on integrated stacks for service providers, sovereign clouds, and enterprises. Networking margins expected to return to low 20s by 2026-2028. Capital allocation prioritizes debt reduction while maintaining $1.3B operating cash flow and $700M free cash flow guidance for FY2025.

Financial Performance

The company's financial performance was strong, with operating cash flow reaching $1.3 billion and free cash flow at $719 million. Inventory was reduced by $933 million sequentially. The company's guidance for Q4 includes continued AI demand and networking integration momentum ahead of October’s investor event.

Valuation Metrics

To understand what's priced in, we can look at HPE's valuation metrics. The company has a P/E Ratio of 24.97, P/B Ratio of 1.28, and P/S Ratio of 0.93. The EV/EBITDA ratio is 14.65, and the Dividend Yield is 2.21%. The Free Cash Flow Yield is 6.08%, indicating a decent return for investors. The Net Debt / EBITDA ratio is 5.6, which is a concern.

Segment Performance

The company's segment performance was mixed, with the networking segment seeing significant growth, while the server segment saw a decline in margin due to higher AI mix. Hybrid cloud revenue grew 11% YoY, with storage revenue surging triple-digits YoY for three consecutive quarters.

Outlook

HPE's guidance for FY2025 includes revenue growth of 14-16%, with non-GAAP gross margin above 30%. The company's focus on AI, cloud, and infrastructure modernization is expected to drive growth, with Juniper's integration playing a key role. The company's strategic focus remains on disciplined execution, margin resilience, and leveraging the expanded portfolio to gain market share.

3. NewsRoom

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Hewlett Packard Enterprise Company (HPE) Q4 2025 Earnings Call Transcript

00:48

Source: seekingalpha.com

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Hewlett Packard Enterprise (HPE) Q4 Earnings Top Estimates

Dec -04

Source: zacks.com

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Markets Flatten on Waning Rate Cut Exuberance

Dec -04

Source:

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Market Today: WBD Sale Bids, Meta Cuts, Apple Shake-Up

Dec -04

Source: gurufocus.com

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HPE Says Customers' AI Delays Weighing on Sales

Dec -04

Source: wsj.com

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HPE Fiscal Q4 Revenue Light Amid Weak Guidance On Delayed Server Deals

Dec -04

Source: investors.com

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HPE shares slide on drop in server revenue despite earnings beat

Dec -04

Source: proactiveinvestors.com

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HPE forecasts weak quarterly revenue

Dec -04

Source: reuters.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.00%)

6. Segments

Server

Expected Growth: 4.5%

Hewlett Packard Enterprise's server growth of 4.5% is driven by increasing demand for edge computing, hybrid cloud adoption, and refreshed product portfolio. The company's strategic focus on high-growth areas like AI, machine learning, and data analytics also contributes to this growth, as customers seek to modernize their infrastructure and improve operational efficiency.

Hybrid Cloud

Expected Growth: 7.0%

Hewlett Packard Enterprise's Hybrid Cloud growth of 7.0% is driven by increasing demand for flexible and scalable infrastructure, strategic partnerships, and investments in cloud-native technologies. Customers are seeking seamless integration between on-premises and public clouds, and HPE's hybrid cloud offerings are well-positioned to capitalize on this trend, driving growth through increased adoption and expanded customer relationships.

Intelligent Edge

Expected Growth: 6.5%

The Intelligent Edge segment growth of 6.5% is driven by increasing demand for edge computing, IoT, and 5G solutions. Hewlett Packard Enterprise's strong portfolio of edge-focused products and services, including Aruba, HPE Ezmeral, and HPE GreenLake, positions it well to capitalize on these trends, driving growth through expanded customer adoption and innovation.

Financial Services

Expected Growth: 2.5%

Hewlett Packard Enterprise's Financial Services segment growth of 2.5% is driven by increasing demand for hybrid IT and financial sector digital transformation. Key drivers include rising adoption of cloud, AI, and data analytics solutions, as well as strategic partnerships and investments in emerging technologies, enabling clients to modernize infrastructure and improve operational efficiency.

Corporate Investments and Other

Expected Growth: 1.8%

The 1.8 growth in Corporate Investments and Other at Hewlett Packard Enterprise Company is driven by strategic acquisitions, increased venture capital investments, and growth in emerging technologies such as AI and cloud computing, which are aligned with the company's hybrid cloud and edge computing strategy.

Eliminations of Intersegment Net Revenue

Expected Growth: 0.0%

The elimination of intersegment net revenue for Hewlett Packard Enterprise Company with 0.0% growth indicates that inter-segment transactions are being netted out, suggesting no incremental revenue growth from these transactions. This could be due to stable segment performance, efficient internal supply chain management, or unchanged business structure.

7. Detailed Products

HPE Servers

HPE offers a range of servers, including ProLiant, Synergy, and Mission-Critical Solutions, designed to provide high performance, reliability, and scalability for various workloads

HPE Storage Solutions

HPE storage solutions include 3PAR Storage, Nimble Storage, and HPE Storage for Data Center, providing efficient data management, high performance, and scalability for storage needs

HPE Networking

HPE networking products include Aruba switching, routing, and wireless solutions, designed to provide secure, reliable, and high-performance connectivity for various network environments

HPE Cloud Services

HPE Cloud Services offer a range of cloud solutions, including HPE GreenLake, HPE Cloud Object Storage, and HPE Cloud Backup, providing flexible, scalable, and secure cloud infrastructure and services

HPE Cybersecurity Solutions

HPE cybersecurity solutions include HPE Security ArcSight, HPE Security Fortify, and HPE Security Services, designed to provide threat detection, incident response, and security consulting services

HPE Data Analytics

HPE data analytics solutions include HPE Ezmeral, HPE InfoSight, and HPE Data Flow, providing data management, analytics, and visualization capabilities for various data sources

HPE Pointnext Services

HPE Pointnext Services offer a range of IT services, including consulting, implementation, and support services, designed to help customers achieve their digital transformation goals

8. Hewlett Packard Enterprise Company's Porter Forces

Forces Ranking

Threat Of Substitutes

Hewlett Packard Enterprise Company (HPE) operates in the technology industry, where substitutes are available but not necessarily perfect. For instance, in the server market, customers can choose between HPE's servers and those from competitors like Dell, Lenovo, or IBM. However, switching costs and compatibility issues might limit the threat. The score of 3 reflects a moderate threat level.

Bargaining Power Of Customers

HPE's customers, primarily large enterprises and organizations, have significant bargaining power due to their substantial purchasing volumes. These customers can negotiate prices, demand customized solutions, and have multiple suppliers to choose from, which puts pressure on HPE to meet their needs. The score of 4 reflects a high bargaining power of customers.

Bargaining Power Of Suppliers

HPE has a diverse and global supply chain with numerous suppliers. While some suppliers might have a degree of bargaining power, HPE's scale and market position allow it to negotiate favorable terms. Additionally, HPE can switch suppliers if needed, reducing the bargaining power of individual suppliers. The score of 2 reflects a low bargaining power of suppliers.

Threat Of New Entrants

The technology industry, particularly the enterprise hardware and services segment, has high barriers to entry. New entrants face significant challenges, including high R&D costs, established brand loyalty, and the need for extensive distribution networks. The score of 2 reflects a low threat of new entrants.

Intensity Of Rivalry

The technology industry is highly competitive, with numerous established players competing for market share. HPE competes directly with major companies like Cisco, Dell, and IBM, among others. The competition is intense, with companies vying for market share through innovation, pricing strategies, and acquisitions. The score of 5 reflects a very high intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 42.37%
Debt Cost 4.28%
Equity Weight 57.63%
Equity Cost 10.60%
WACC 7.92%
Leverage 73.53%

11. Quality Control: Hewlett Packard Enterprise Company passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Growth: 4.1

Quality: 7.7

Yield: 5.0

Momentum: 8.0

Volatility: 9.7

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IBM

A-Score: 5.5/10

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QUALCOMM

A-Score: 5.3/10

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NetApp

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Volatility: 7.0

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HPE

A-Score: 5.0/10

Value: 4.8

Growth: 4.0

Quality: 3.6

Yield: 5.0

Momentum: 7.5

Volatility: 5.3

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Motorola Solutions

A-Score: 5.0/10

Value: 1.0

Growth: 6.4

Quality: 7.0

Yield: 2.0

Momentum: 4.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

22.9$

Current Price

22.9$

Potential

0.00%

Expected Cash-Flows