【how to compare a single bit in omron】Does Hewlett Packard Enterprise Company’s (NYSE:HPE) P/E Ratio Signal A Buying Opportunity?

发布时间：2024-09-29 08:19:16 来源：laurann dohner new species book 16 release date 作者：Entertainment

This how to compare a single bit in omronarticle is written for those who want to get better at using price to earnings ratios (P/E ratios). To keep it practical, we’ll show how Hewlett Packard Enterprise Company’s (

NYSE:HPE

) P/E ratio could help you assess the value on offer. Based on the last twelve months,

Hewlett Packard Enterprise’s P/E ratio is 9.9

. That is equivalent to an earnings yield of about 10%.

See our latest analysis for Hewlett Packard Enterprise

How Do I Calculate Hewlett Packard Enterprise’s Price To Earnings Ratio?

The

formula for P/E

is:

Price to Earnings Ratio = Price per Share ÷ Earnings per Share (EPS)

Or for Hewlett Packard Enterprise:

P/E of 9.9 = $13.03 ÷ $1.32 (Based on the trailing twelve months to October 2018.)

Is A High Price-to-Earnings Ratio Good?

A higher P/E ratio implies that investors pay

a higher price

for the earning power of the business. All else being equal, it’s better to pay a low price — but as Warren Buffett said, ‘It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.’

How Growth Rates Impact P/E Ratios

When earnings fall, the ‘E’ decreases, over time. Therefore, even if you pay a low multiple of earnings now, that multiple will become higher in the future. A higher P/E should indicate the stock is expensive relative to others — and that may encourage shareholders to sell.

Notably, Hewlett Packard Enterprise grew EPS by a whopping 397% in the last year. And its annual EPS growth rate over 5 years is 5.7%. So we’d generally expect it to have a relatively high P/E ratio. In contrast, EPS has decreased by 7.1%, annually, over 3 years.

How Does Hewlett Packard Enterprise’s P/E Ratio Compare To Its Peers?

The P/E ratio indicates whether the market has higher or lower expectations of a company. If you look at the image below, you can see Hewlett Packard Enterprise has a lower P/E than the average (14.9) in the tech industry classification.

NYSE:HPE PE PEG Gauge January 2nd 19

Hewlett Packard Enterprise’s P/E tells us that market participants think it will not fare as well as its peers in the same industry. Many investors like to buy stocks when the market is pessimistic about their prospects. You should delve deeper. I like to check

if company insiders have been buying or selling

.

Remember: P/E Ratios Don’t Consider The Balance Sheet

It’s important to note that the P/E ratio considers the market capitalization, not the enterprise value. That means it doesn’t take debt or cash into account. Hypothetically, a company could reduce its future P/E ratio by spending its cash (or taking on debt) to achieve higher earnings.

Such spending might be good or bad, overall, but the key point here is that you need to look at debt to understand the P/E ratio in context.

How Does Hewlett Packard Enterprise’s Debt Impact Its P/E Ratio?

Net debt totals 40% of Hewlett Packard Enterprise’s market cap. If you want to compare its P/E ratio to other companies, you should absolutely keep in mind it has significant borrowings.

The Bottom Line On Hewlett Packard Enterprise’s P/E Ratio

Hewlett Packard Enterprise has a P/E of 9.9. That’s below the average in the US market, which is 16. The EPS growth last year was strong, and debt levels are quite reasonable. If it continues to grow, then the current low P/E may prove to be unjustified.

When the market is wrong about a stock, it gives savvy investors an opportunity. If it is underestimating a company, investors can make money by buying and holding the shares until the market corrects itself. So this

free

report on the analyst consensus forecasts

could help you make a

master move

on this stock.

But note:

Hewlett Packard Enterprise may not be the best stock to buy

. So take a peek at this

free

list of interesting companies with strong recent earnings growth (and a P/E ratio below 20).

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at

[email protected]

.

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