Net debt is reported at $8.3 billion, but this excludes financing receivables to the tune of about $15 billion here, as well as some equity investments. Moreover, the balance sheet has seen continued strength, with growing net cash balances. While I am happy to adjust for some amortization charges, the same is not the case for a rather substantial stock-based compensation ("SBC") expense, as well as continued transformation costs, which makes that the GAAP earnings look quite fair. GAAP earnings were reported at $1.54 per share on a diluted basis, more than doubling from the year before, as adjusted earnings were reported at $2.15 per share. The cash flows statement for 2023 revealed that about three quarters of a billion were spent on such acquisitions.īy November, the company posted its fiscal 2023 results, with full year sales of $29.1 billion, reported up 2% for the year, coming in dead flat compared to 2019. The company announced some relatively smaller acquisitions, with few financial details announced, with acquisitions including the likes of Pachyderm, Athonet, Axis Security and OpsRamp, among others. The years 20 were relatively uneventful, but some acquisitive moves were made in 2023. This makes for some returns, but nothing exciting in any case. Ever since, shares have been trading in a remarkably tight trading range between $12 and 18 per share for a period of three years which followed, now trading hands at $16 per share. Since the summer of 2020, HPE shares quickly recovered, alongside the rest of the market, trading in the mid-teens by year-end. With shares down to $10 in the summer of the pandemic, overall valuations were very non-demanding, certainly not if we factor in net cash, a number which would take a small hit following a near billion dollar deal for Silver Lake, which added about half a percent (albeit quickly growing) revenues to the business. That, however, is if we define net cash as all the inclusions of all financing receivables and payables, as HPE has a large financing business as well. Moreover, the company actually operated with a near $5 billion net cash position pre-pandemic, equal to $3 and change on a per-share basis. Trading at $15 pre-pandemic, the 8 times adjusted earnings multiple looked non-demanding, yet with negative top line growth and heavy adjustments made to earnings, it is understandable why investors acted reserved to apply a higher multiple to these numbers. Adjusted earnings were reported at $1.77 per share, yet GAAP earnings have been coming in much lower (for a longer period of time) due to structural transformation and restructuring costs, among others. Pre-pandemic, for the year 2019, this was a $29.1 billion business, which saw sales fall 6% that year. The remaining enterprise business is comprised out of a range of segments which includes intelligence edge, HPC & AI, storage, compute and financial services and was a giant operation already. ( HPQ) in essence being the surviving entity of the former giant. Hewlett Packard Enterprise was spun off from its former parent, with HP Inc. ( NYSE: JNPR ), which raises some real questions here. After the business became more acquisitive in 2023, it started 2024 with a big deal, as HPE announced a near $14 billion deal to acquire Juniper Networks, Inc. In the years that followed, HPE has seen stagnation. In the summer of 2020, I believed that Hewlett Packard Enterprise Company ( NYSE: HPE ) looked cheap and likely would remain cheap for some time to come, as cheapness alone is seldom enough of a reason to make a good investment.
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