What to Expect from Hewlett Packard Enterprise in Fiscal 1Q18

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Part 5
What to Expect from Hewlett Packard Enterprise in Fiscal 1Q18 PART 5 OF 6

What’s Hewlett Packard Enterprises’ Valuation Multiple?

Price-to-earnings ratio

Hewlett Packard Enterprise (HPE) trades at a forward PE (price-to-earnings) ratio of 13.11x, which is below the peer average of 14.56x. Peer firms such as Cisco (CSCO), Juniper (JNPR), NetApp (NTAP), and IBM (IBM) have forward PE ratios of 16.66x, 14.51x, 17.61x, and 10.9x, respectively.

Now let’s look at HPE’s EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) ratio estimates. HPE trades at a forward EV-to-EBITDA ratio of 5.05x, which is lower than the peer average of 8.39x. Cisco is trading above the average forward EV-to-EBITDA ratio at 9.82x, while IBM, NetApp, and Juniper have ratios of 8.97x, 9.7x, and 8.4x, respectively.

What&#8217;s Hewlett Packard Enterprises&#8217; Valuation Multiple?

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EBITDA margin and profitability ratios

HPEs EBITDA margin is 17%. The EBITDA margin for Juniper, Cisco, IBM, and NetApp are 23%, 31%, 19%, and 19%, respectively. HPE’s ROA (return on assets) is expected to be 0.85% in fiscal 2018 and 0.39% in fiscal 2019. In comparison, the firm’s ROE (return on equity) is expected to be 7.1% in fiscal 2018 and 8.7% in fiscal 2019.

Debt-to-EV ratio

HPE has a debt-to-EV ratio of 54%. This ratio for Juniper, Cisco, NetApp, and IBM stands at 24%, 21%, 24%, and 27%, respectively. HPE has an estimated price-to-sales ratio of 0.85x. The estimated price-to-sales ratio for peer companies such as Juniper, Cisco, NetApp, and IBM stand at 1.95x, 4.27x, 2.78x, and 1.76x, respectively.


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