Hewlett Packard Enterprise Stocks Show Strong Growth and Promising Valuation
Hewlett Packard Enterprise (HPE) appears to be trading at a lower valuation compared to its industry average. Currently, HPE stock has a forward 12-month price-to-earnings (P/E) ratio of 9.82, which is well below the Zacks Computer – Integrated Systems industry average of 19.19.
Understanding HPE’s P/E Ratio
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Over the past year, HPE stock has shown a consistent upward trend, gaining 35.7%. This performance surpasses the returns of both the Zacks Computer and Technology sector and the S&P 500 index, which returned 22.2% and 21.8%, respectively, during the same timeframe.
In addition, HPE stock has outperformed its industry peers, such as Micron (MU), Seagate Technology (STX), and Advanced Micro Devices (AMD).
Year-Over-Year Performance Comparison
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Growth Factors: GreenLake and AI
The significant growth of HPE’s stock over the past year is supported by solid performance in key areas, particularly HPE GreenLake and AI systems. Companies are increasingly adopting HPE GreenLake, attracted by its flexibility and scalability.
Customer growth for GreenLake surged approximately 34.5% year over year, reaching 39,000 by the fourth quarter of fiscal 2024. This expansion contributed to a remarkable 48% increase in annualized revenue run rate, exceeding $1.9 billion at the close of the fiscal fourth quarter.
Demand for HPE’s AI systems remains robust. During the fourth-quarter earnings call for fiscal 2024, HPE announced cumulative orders for AI products and services totaling $6.7 billion since the first quarter of fiscal 2023. New AI orders in the same quarter have increased the backlog to $3.5 billion.
These trends are expected to boost HPE’s revenue. The Zacks Consensus Estimate for fiscal 2025 anticipates revenues of $32.4 billion, reflecting a year-over-year growth of 7.5%. Similarly, earnings for fiscal 2025 are projected at $2.11, representing a growth of 6% year over year.
Notably, HPE has beaten the Zacks Consensus Estimate in each of the last four quarters, averaging an impressive surprise of 7.84%.
Examining HPE’s Price and Earnings Surprise
Hewlett Packard Enterprise Company price-consensus-eps-surprise-chart | Hewlett Packard Enterprise Company Quote
Access the latest EPS estimates and surprises on Zacks Earnings Calendar.
Conclusion: A Strong Buy for HPE Stock
HPE’s growth driven by GreenLake and AI technologies signals potential for substantial long-term returns. Considering its attractive valuation, placement within the industry’s upper quartile, and strong past-year performance, now may be a good time to invest in this Zacks Rank #2 (Buy) stock.
Zacks Ranks the Top Semiconductor Stock
While small compared to NVIDIA, which has seen a meteoric rise of over +800% since our recommendation, our latest top chip stock displays even greater potential for growth.
With strong earnings and a growing customer base, it’s well-positioned to meet the increasing demands for Artificial Intelligence, Machine Learning, and the Internet of Things. Global semiconductor manufacturing is projected to soar from $452 billion in 2021 to $803 billion by 2028.
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