HPE Stock Outperforms Market, Faces Short-Term Challenges Ahead

Hewlett Packard Enterprise's stock has surged 34.1% over the past year, showcasing strong performance. However, concerns about macros could impact future returns. Hold HPE stock for now as it navigates growth and challenges.

Date: 11-01-2025

AI Rating: 5

Earnings Per Share (EPS): The report indicates a downward revision in Zacks Consensus Estimate for fiscal 2025 earnings to $2.10, and for fiscal 2026 earnings to $2.28. This suggests less-than-ideal expectations for future earnings, which could negatively impact investor sentiment.

Revenue Growth: HPE reported a significant expansion in its GreenLake customer base, growing by 34.5% year-over-year, and showcased a remarkable 48% increase in annualized revenue run rate, reaching over $1.9 billion. This strong revenue growth presents a positive outlook for HPE.

Net Income: There is no specific data provided regarding net income figures, which limits a full assessment of profitability.

Profit Margins: The report reveals that HPE's non-GAAP gross margin contracted by 390 basis points year-over-year to 30.9%. This pressure on margins can lead to concerns over profitability.

Free Cash Flow (FCF): Information on free cash flow is not provided, making it difficult to analyze cash generation from operations.

Return on Equity (ROE): There is no mention of returns on equity, so this cannot be evaluated based on the report.

Conclusion: While HPE's revenue growth and success driven by its GreenLake and AI divisions showcase positive potential, the concerns over earnings revisions and margin pressures point to cautious sentiment among investors. Given these mixed signals, HPE's stock remains a hold as the company navigates short-term hurdles while seeking long-term growth opportunities.

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