HP Enterprise ( HPE ) has been refining its go-to market strategy, and has repositioned its business along the lines of evolving demand trends and to benefit from economies of scale at a business unit level. HPE breaks down its business in the following segments:
Hybrid IT : This segment houses HPE’s hardware, software and services revenue streams with the aim of leveraging the benefits of umbrella solutions that the company can offer to customers. Hybrid IT accounted for 79% of the company’s total revenue in 2018. In Q1 2019, revenue declined to $6 billion (-3% y-o-y). Despite a shift in mix towards high performance compute, hyperconverged and composable infrastructure, legacy businesses have continued to weigh on the segment’s growth.
Intelligent Edge : This segment is the company’s focal area and offers enterprise networking and security solutions, operating under the Aruba brand. Intelligent Edge was 9% of the total revenue in 2018. In Q1 2019, revenue grew to $686 million (+5% y-o-y), driven by strength in Aruba services of 20% y-o-y.
Financial Services : The Financial Services segment is aimed at helping customers invest in their IT models. Segment offerings include leasing, financing and asset management services. Financial Services accounted for about 12% of the total revenue in 2018. In Q1 2019, this revenue grew to $919 million (+3% y-o-y), driven by double digit growth in the company’s asset management business.
Corporate Investments : This segment houses Hewlett Packard Labs and some of of the company’s incubation projects.
We currently have a price estimate of $18 per share for HPE, which is around 20% higher than the current market price. Our interactive dashboard on HP Enterprise’s Price Estimate outlines our forecasts and estimates for the company. You can modify any of the key drivers to visualize the impact of changes on its valuation, and see all of our information technology data here.
Given HPE’s management’s expectations of growth, cost control and shift in business mix, the company also revised its non-GAAP EPS guidance for fiscal 2019 upwards to $1.56-1.66 from $1.51-1.61.
Do not agree with our forecast? Create your own price forecast for HPE by changing the base inputs (blue dots) on our interactive dashboard.
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