The Hidden Gem of the Tech World: A Closer Look at Hewlett Packard Enterprise Company
Introduction:
With the current hype around AI and technology, you’d think $HPE would be soaring. But interestingly, it seems to have been overlooked by investors, leaving it with a relatively low valuation.
Intrigued by this discrepancy, I decided to dig a little deeper into Hewlett Packard Enterprise Company, its business operations, financials, and growth prospects in the AI and supercomputing sectors. Let’s embark on this journey together and uncover the potential of this hidden gem.
Hewlett Packard Enterprise Company: A Closer Look
Corporations can be complex, and Hewlett Packard is no exception. A few years back, the company split into two separate entities. HP Inc. ($HPQ) now focuses on creating computers and printers, while Hewlett Packard Enterprise Company ($HPE) operates in the cloud storage, AI, and supercomputing spaces.
$HPE boasts an impressive list of clients, including major corporations and government entities like ExxonMobil, Disney, The Home Depot, Raytheon, AG Insurance, the United States Department of Energy, and the United States Department of Defense. As an established, profitable business with significant contracts, $HPE is well-positioned in the trendy AI and computing sectors.
Financial Analysis of Hewlett Packard Enterprise Company
Most tech stocks are trading at high price-to-earnings (P/E) ratios, especially those with any association with AI. For instance, NVIDIA Corporation has a P/E ratio of 37.55, and Advanced Micro Devices is trading at a P/E ratio of 45.42. Even IBM, a company that has been around for decades, has a P/E ratio of 16.78.
However, Hewlett Packard Enterprise Company’s P/E ratio is a mere 9.52. This low valuation is usually reserved for no-growth or dying businesses, but $HPE is far from that. In fact, they’re expanding their AI infrastructure and recently acquired Juniper Networks, the owners of Mist AI. Additionally, $HPE has partnered with NVIDIA to train AI on their Cray supercomputers, demonstrating their commitment to the AI space and potential for further growth.
Dividend and Debt
$HPE offers a starting dividend of 2.89%, with a 5-year compound annual growth rate (CAGR) of 2.13% and a relatively safe payout ratio of 24.38%. It’s important to note that the company has taken on a significant amount of debt with the Juniper Networks acquisition. While this debt could pose a problem if the AI bubble were to burst, the same could be said for many high-flying AI stocks with premium valuations.
Growth Prospects in the AI and Supercomputing Sectors
The global AI market is expected to grow at a CAGR of 37.3% from 2022 to 2029, reaching a value of $1,094.1 billion by 2029. With $HPE’s involvement in the AI space and their commitment to expanding their AI infrastructure, they’re well-positioned to capitalize on this growth.
Similarly, the global supercomputer market is expected to grow at a CAGR of 7.9% from 2021 to 2028, reaching a value of $44.8 billion by 2028. $HPE’s Cray supercomputers are already being used by major organizations and government entities, and their continued innovation in the field could lead to further growth in this market.
Conclusion
In conclusion, Hewlett Packard Enterprise Company is a fascinating candidate for a „hidden gem“ investment, with its relatively low valuation, impressive
Disclaimer: This article is intended for informational and educational purposes only and should not be construed as financial advice. Always do your own research and consult with a financial professional before making investment decisions.