Skip to main content

Should You Add Hewlett Packard Stock to Your 2021 Watchlist?

Hewlett Packard (HPE) is one tech stock that has not performed as well as the rest of the technology sector this year as it is currently undervalued considerably. Should you consider this stock for next year? Read more to find out.

Hewlett Packard (HPE) provides hardware and services that are enterprise-facing as opposed to consumer-facing. Alternatively, HP Inc. makes reliable computers, printers, scanners, and other computer-related devices for use at home, trading under the symbol of HPQ. The two businesses split in November of 2015.

HPE was priced slightly below $20 in 2018, yet the stock has reversed course since, currently trading at a mere $11.79 per share. It is concerning that HPE first traded at $9.90 back in October of 2015. This means the stock has increased a mere $2 per share in the past half-decade even though it has a solid reputation amongst its enterprise clients. Let's take a look at whether HPE is worthy of a place on your watchlist.

HPE by the Numbers

Take a close look at HPE's facts and figures, and you will agree the one number that leaps out from the page is the stock's forward P/E ratio. HPE has an astonishingly low forward P/E ratio of a mere 7.40. If you were to rewind time back to the 90s, the talking heads on CNBC were adamant a P/E ratio of 12 was optimal for a stock. Nowadays, most stock market experts insist 20 is a reasonable P/E ratio. However, HPE is well below both of these benchmarks. It is clear that HPE is undervalued at its current trading price, just under $12.

Another intriguing number that pops off the page is HPE's dividend of 4.08%. This is a fairly high dividend for a tech stock. You will be hard-pressed to find a more intriguing play than HPE, mainly because of the income its high dividend provides.

It is also intriguing to note HPE has a 52-week high of $16.18 and a 52-week low of $7.43. The stock is trading $4 above its low and nearly $5 away from its high.

The Analysts' Take on HPE

Analysts view HPE as underpriced by slightly more than 1%. The average analyst price target for the stock is $11.94. Of the ten analysts who cover HPE, six recommend holding; two recommend buying, and two advise selling. In other words, there is no analyst consensus on HPE. The stock could easily climb 5% or drop 5% in the months ahead, and it wouldn't be much of a surprise.

Check out HPE's POWR Ratings, and you will find the stock is ranked 26th of 60 stocks in the Technology - Services industry. HPE has "C" grades in the Buy & Hold Grade and Trade Grade components. In terms of performance, HPE has a concerning year-to-date loss of 22.33%, which followed a 23.72% return in 2019. 

Latest Earnings

Take a look at HPE's most recent quarterly earnings, and you will see mixed results. HPE's fourth-quarter non-GAAP earnings came in at 37 cents per share. This figure beat analysts' expectations of 34 cents per share. However, earnings were significantly lower year over year.

HPE's $7.2 billion revenue is down a mere 0.1% from this time one year ago. The good news is that the company was able to clear out its $250 million backlog successfully. Furthermore, top-line progress results from the company's as-a-service platform and improvements in Intelligent Edge and HPC & MCS.

HPE is in a good position now that its software-as-a-service and edge-to-cloud data storage is in high demand following the shift to remote working. Furthermore, HPE's storage segment has generated 8% sequential revenue growth, its Intelligent Edge division revenue is up 15%, and its financial service segment's revenue is up 5%.

The Verdict

Though HPE is rarely mentioned amongst the cloud stocks, the bottom line is that the company is benefitting from the transition away from in-office work to working with the cloud's assistance. HPE's recent quarterly performance was much better than expected, painting a rosy picture for the stock's future. HPE is likely underpriced at its current trading level of $11 to $12 per share. This stock is more than deserving of a place on your watchlist.

Want More Great Investing Ideas?

“MUST OWN” Growth Stocks for 2021

5 WINNING Stocks Chart Patterns

7 Best ETFs for the NEXT Bull Market


HPE shares were trading at $11.65 per share on Tuesday afternoon, down $0.14 (-1.19%). Year-to-date, HPE has declined -23.25%, versus a 17.59% rise in the benchmark S&P 500 index during the same period.



About the Author: Patrick Ryan

Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management.

More...

The post Should You Add Hewlett Packard Stock to Your 2021 Watchlist? appeared first on StockNews.com
Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.