Hewlett Packard Enterprise Co. (NYSE:HPE)

The analysis of the financial data reveals notable trends and shifts in the values of goodwill, various intangible assets, and their accumulated amortization over the six-year period ending October 31, 2023.

Goodwill

The goodwill value showed modest fluctuations, beginning at $17,537 million in 2018 and peaking at $18,306 million in 2019 and 2021. It experienced a decline to $17,403 million in 2022, followed by an increase to $17,988 million in 2023. Overall, the goodwill value maintained relative stability with minor variances.

Customer Contracts, Customer Lists, and Distribution Agreements

This category exhibited growth from $272 million in 2018 to a peak of $475 million in 2022, indicating significant expansion in these intangible assets. However, it declined sharply to $357 million in 2023, suggesting possible disposals, revaluations, or amortization impacts.

Developed and Core Technology and Patents

The value rose from $1,121 million in 2018 to a high of $1,371 million in 2019. Thereafter, it gradually decreased each year, reaching $1,162 million by 2023. The trend suggests initial growth followed by a steady amortization or impairment of this asset class.

Trade Name and Trademarks

Trade names and trademarks increased from a modest $87 million in 2018 to $163 million in 2019, then stabilized around the mid-140 millions over subsequent years, ending at $146 million in 2023. The data indicate a brief growth phase followed by consistent valuation.

In-Process Research and Development

This asset showed considerable volatility, surging from $18 million in 2018 to $141 million in 2019, then decreasing to $106 million in 2020 and sharply dropping to $4 million in 2021. The figures are absent for 2022 and 2023, suggesting possible full amortization, completion, impairment, or reclassification.

Intangible Assets, Gross

The total gross intangible assets steadily rose from $1,498 million in 2018 to $1,987 million in 2019, followed by a decline over the subsequent years, reaching $1,665 million in 2023. This trajectory reflects some asset growth initially, then consistent reductions attributable to amortization or asset disposals.

Accumulated Amortization

Accumulated amortization consistently increased in magnitude (more negative), starting at -$709 million in 2018 and reaching its peak at -$1,049 million in 2022, before a slight reduction in 2023 to -$1,011 million. This pattern indicates continuing amortization charges on intangible assets with a minor reversal or adjustment in the latest year.

Intangible Assets, Net

Net intangible assets rose notably from $789 million in 2018 to $1,128 million in 2019 but then exhibited a downward trend, declining to $654 million by 2023. This decline corresponds with the trend of growing accumulated amortization and overall decrease in gross intangible assets.

Goodwill and Intangible Assets Combined

The combined total of goodwill and intangible assets fluctuated slightly, increasing from $18,326 million in 2018 to a peak of $19,434 million in 2019, then declining to $18,136 million by 2022, and recovering modestly to $18,642 million in 2023. These movements reflect the combined effects of changes in goodwill and intangible asset portfolios.

In summary, the data depict initial growth followed by moderate declines in several intangible asset categories, particularly visible in developed technology, customer-related intangibles, and net intangible assets. The pattern of accumulated amortization shows steady increases, consistent with asset amortization policies. The goodwill balance remains comparatively stable with only minor fluctuations. The absence of in-process research and development values in the latest years signals possible asset completions or write-offs. Overall, the company’s intangible asset profile suggests a phase of growth culminating around 2019, followed by a period of amortization and asset base attrition through 2023, with partial recovery in total combined goodwill and intangible assets in the final year reported.

Total Assets (Reported)

The reported total assets demonstrate a fluctuating but generally stable trend over the six-year period. Starting at approximately 55.5 billion USD in 2018, assets declined to about 51.8 billion in 2019. This was followed by a recovery and gradual increase, peaking around 57.7 billion in 2021, then slightly decreasing but remaining stable near 57.1 billion in 2022 and 2023.

Total Assets (Adjusted)

The goodwill adjusted total assets reveal a different pattern with lower values overall, reflecting adjustments for intangible assets. The adjusted assets decreased from roughly 38.0 billion USD in 2018 to 33.5 billion in 2019. Subsequently, there was a consistent upward trend through 2022, reaching about 39.7 billion, before a minor decline to 39.2 billion in 2023.

Stockholders’ Equity (Reported)

The reported stockholders’ equity exhibits a declining trend from 21.2 billion USD in 2018 down to 16.0 billion in 2020. There is then a strong rebound to approximately 19.9 billion in 2021, followed by stability around 19.8 billion in 2022 and an increase to 21.2 billion in 2023, returning to near the 2018 level.

Stockholders’ Equity (Adjusted)

The adjusted stockholders’ equity starts at a much lower value of about 3.7 billion USD in 2018 and turns negative in 2019 and 2020, reaching negative 1.2 billion and negative 2.0 billion respectively. This indicates substantial goodwill or intangible asset effects. Improvement occurs starting in 2021 with positive equity of 1.7 billion, followed by continued increases to 2.5 and 3.2 billion in 2022 and 2023 respectively, showing a recovery trend.

Net Earnings (Reported)

Reported net earnings demonstrate volatility: from strong earnings of nearly 1.9 billion USD in 2018, profits declined sharply to about 1.0 billion in 2019 and a loss of 0.3 billion in 2020. A significant recovery is observed in 2021 with earnings surging to 3.4 billion, followed by a decline to 0.9 billion in 2022 and a rise again to 2.0 billion in 2023.

Net Earnings (Adjusted)

The adjusted net earnings follow a similar pattern but without the 2020 loss. Earnings remain near 2.0 billion in 2018 and 1.0 billion in 2019, then improve to 0.5 billion in 2020 instead of a loss. The 2021 peak at 3.4 billion is consistent with reported earnings, followed by a less pronounced decline to about 1.8 billion in 2022 and a rebound to 2.0 billion in 2023. This suggests adjustments have smoothed out exceptional items or impairments present in reported figures.

The financial data reveals several notable trends over the six-year period ending October 31, 2023, across both reported and goodwill-adjusted metrics.

Net Profit Margin

The reported net profit margin experienced a decrease from 6.18% in 2018 to 3.6% in 2019, followed by a negative margin of -1.19% in 2020, indicating a year of losses. However, there was a significant recovery in 2021, reaching 12.33%, before declining again to 3.05% in 2022 and rising to 6.95% in 2023. The adjusted net profit margin, which accounts for goodwill, displays a smoother trajectory with less volatility, avoiding the negative dip in 2020 and peaking at 12.33% in 2021, then maintaining relatively stable values around 6% in subsequent years.

Total Asset Turnover

Reported total asset turnover demonstrated a gradual decline from 0.56 in 2018 and 2019 to 0.48 in 2021, with a slight recovery to 0.51 by 2023. The adjusted total asset turnover, however, shows higher values overall, starting at 0.81 in 2018, peaking at 0.87 in 2019, and then declining to around 0.71-0.74 range from 2021 to 2023, suggesting that asset efficiency adjusted for goodwill is consistently better and more resilient over time compared to reported figures.

Financial Leverage

Reported financial leverage increased from 2.61 in 2018 to a peak of 3.37 in 2020, followed by a gradual decrease to 2.7 by 2023. In contrast, the adjusted financial leverage is substantially higher, showing wide fluctuations. It started at 10.25 in 2018, was not reported for 2019 and 2020, then surged to 23.66 in 2021 before declining steadily to 12.26 in 2023. This indicates that when goodwill is considered, the company exhibits significantly greater leverage, which may reflect the influence of intangible assets on the capital structure and associated risks.

Return on Equity (ROE)

The reported ROE mirrors the pattern seen in net profit margin, declining from 8.98% in 2018 to a negative -2.01% in 2020, then rebounding sharply to 17.16% in 2021. This was followed by a decrease to 4.37% in 2022 and recovery to 9.56% in 2023. Adjusted ROE figures are extremely elevated, starting at 53.92% in 2018, not reported in some years, then reaching an exceptionally high 205.83% in 2021 and remaining elevated above 60% in the latest period, reflecting the effects of goodwill adjustments which magnify equity returns, possibly due to reduced equity base in the adjustment.

Return on Assets (ROA)

Reported ROA slightly declined from 3.44% in 2018 to a negative -0.6% in 2020, followed by improvement to 5.94% in 2021, then decreasing to 3.54% by 2023 after a low of 1.52% in 2022. The adjusted ROA consistently outperforms reported figures, with a more stable range from 1.51% in 2020 to a peak of 8.7% in 2021, declining moderately to 5.17% in 2023. This pattern suggests that the company's asset utilization efficiency is stronger when goodwill adjustments are considered.

In summary, the data indicates a period of volatility in profitability and efficiency metrics around 2020, with a marked recovery in 2021. Adjusted measures accounting for goodwill consistently show higher profitability and efficiency ratios, though they also reflect higher leverage and more pronounced fluctuations. The contrast between reported and adjusted figures underscores the significant impact of goodwill on the company's financial profile and suggests that goodwill plays a critical role in shaping financial performance measures.

Net Earnings (Loss) Attributable to HPE

The reported net earnings exhibited considerable volatility over the six-year period. In 2018, the company earned 1908 million USD, which declined sharply to 1049 million USD in 2019. The year 2020 showed a net loss of 322 million USD, indicating a negative performance. However, this was followed by a strong recovery in 2021 with earnings surging to 3427 million USD. Subsequently, earnings dropped again to 868 million USD in 2022, before recovering to 2025 million USD in 2023.

Adjusted Net Earnings (Loss) Attributable to HPE

The adjusted net earnings generally followed the pattern of the reported earnings but depicted less volatility. Starting at 1996 million USD in 2018, adjusted earnings decreased to 1049 million USD in 2019 but remained positive in 2020 at 543 million USD, contrasting with the reported loss. A significant increase occurred in 2021, matching the reported value at 3427 million USD. Following this peak, adjusted earnings decreased to 1773 million USD in 2022, before rising again to 2025 million USD in 2023.

Reported Net Profit Margin

The reported net profit margin showed a similar fluctuating trend. It started at 6.18% in 2018 and declined to 3.6% in 2019, turning negative at -1.19% in 2020. A marked improvement was seen in 2021 with the margin reaching 12.33%, the highest value over the period. This was followed by a decrease to 3.05% in 2022, then an increase to 6.95% in 2023.

Adjusted Net Profit Margin

The adjusted net profit margin paralleled the reported margin but was positive throughout the period. It began at 6.47% in 2018, declined to 3.6% in 2019, and improved to 2.01% in 2020, reflecting the adjusted earnings’ positive position during a reported loss year. The margin peaked in 2021 at 12.33%, identical to the reported figure. Afterward, it decreased to 6.22% in 2022, and then slightly increased to 6.95% in 2023.

Overall Trends and Insights

The company demonstrated periods of substantial earnings volatility, especially notable in the 2020 reported loss versus adjusted positive earnings. Earnings and profit margins recovered significantly in 2021 before experiencing declines in 2022 and partial recovery in 2023. Adjusted figures generally smoothed the reported earnings fluctuations, indicating that certain one-time or non-recurring items impacted the reported results. The data suggests an underlying profitability that remained positive even during the reported loss year of 2020. The significant peak in 2021 may reflect an exceptional performance or event. Subsequent fluctuations indicate variability in operating performance or external conditions affecting profitability.

The analysis of the financial data over the six-year period reveals several key trends in asset management and efficiency.

Total Assets

The reported total assets exhibited a fluctuating pattern, with a decrease from 55,493 million US dollars in 2018 to 51,803 million in 2019, followed by an increase reaching a peak of 57,699 million in 2021. Subsequently, the assets slightly declined and stabilized around 57,123 million in 2022 and 57,153 million in 2023.

Adjusted total assets consistently trended lower than reported assets, starting at 37,956 million in 2018 and decreasing to 33,497 million in 2019. After this, there was a gradual increase up to 39,393 million in 2021, remaining relatively steady around 39,165 million by 2023, indicating a moderate recovery and stabilization in adjusted terms.

Total Asset Turnover

The reported total asset turnover ratio showed a slight decline from 0.56 in 2018 and 2019 to 0.5 in 2020, further decreasing to 0.48 in 2021. However, the ratio improved slightly to 0.5 in 2022 and 0.51 in 2023, suggesting varying efficiency in generating revenue from assets over the period, with recent indications of stabilization or minor improvement.

The adjusted total asset turnover ratio was consistently higher than the reported ratio across all years. It peaked at 0.87 in 2019 and then experienced a decline to 0.75 in 2020 and 0.71 in 2021, before showing a slight recovery up to 0.74 by 2023. This pattern suggests that when goodwill and other adjustments are considered, the company’s asset utilization remains comparatively efficient, though with some volatility.

Overall, the data suggests that while the total assets have experienced some volatility, the company’s asset turnover ratios indicate ongoing efforts to maintain or improve asset efficiency. The adjusted figures notably present a more optimistic view of resource utilization compared to the reported figures, reflecting the impact of adjustments on financial analysis.

The financial data exhibits varied trends in both reported and goodwill adjusted figures over the six-year period.

Total Assets

Reported total assets initially declined from 55,493 million USD in 2018 to 51,803 million USD in 2019, followed by a moderate recovery peaking at 57,699 million USD in 2021. Thereafter, the values slightly decreased and stabilized around 57,123 to 57,153 million USD through 2022 and 2023 respectively.

Adjusted total assets show a consistent downward trend from 37,956 million USD in 2018 to a low of 33,497 million USD in 2019, then a gradual increase to 39,393 million USD in 2021, and a slight decline afterwards to 39,165 million USD in 2023.

Stockholders’ Equity

Reported total stockholders’ equity shows a sharp drop from 21,239 million USD in 2018 to 16,049 million USD in 2020, before recovering to 19,971 million USD in 2021 and remaining near 21,182 million USD in 2023. This indicates volatility with a 2020 trough likely due to market or operational factors.

Adjusted stockholders’ equity reveals considerably lower and even negative values for 2019 (-1,208 million USD) and 2020 (-1,968 million USD), contrasting with positive values in other years, indicating the impact of goodwill adjustments. From 2021 onwards, there is a strong upward trend from 1,665 million USD to 3,194 million USD in 2023, suggesting an improvement in the adjusted equity position.

Financial Leverage

Reported financial leverage increased from 2.61 in 2018 to a peak of 3.37 in 2020, indicating higher reliance on debt financing during this period, followed by a decrease to 2.7 in 2023, suggesting a gradual reduction in leverage.

Adjusted financial leverage shows more erratic behavior, with an initial high ratio of 10.25 in 2018, missing values for 2019 and 2020, then a sharp peak at 23.66 in 2021, decreasing subsequently to 12.26 by 2023. This high variability reflects the sensitivity of leverage metrics to goodwill adjustments and fluctuating adjusted equity.

Overall, the reported figures demonstrate relative stability in total assets and a moderate recovery in equity after mid-period declines. Adjusted figures reflect the significant impact of goodwill and other adjustments, with more pronounced fluctuations in equity and leverage, implying that underlying asset valuation and capital structure assessments differ considerably when excluding goodwill. The trends in financial leverage, both reported and adjusted, highlight periods of increased financial risk followed by attempts at deleveraging.

An analysis of the reported and goodwill adjusted financial data reveals several notable trends over the timeframe from 2018 to 2023.

Net Earnings (Loss) Attributable to HPE (Reported vs. Adjusted)

The reported net earnings have exhibited significant volatility. Starting at a substantial profit of $1,908 million in 2018, earnings declined sharply to $1,049 million in 2019, then turned negative with a loss of $322 million in 2020. However, there was a strong recovery in 2021 reaching $3,427 million, followed by a decline to $868 million in 2022, before rising again to $2,025 million in 2023. In contrast, the adjusted net earnings, which likely exclude certain items such as goodwill impairments, show a smoother trajectory. They start similarly at $1,996 million in 2018, maintain the 2019 figure at $1,049 million, increase to a positive $543 million in 2020, then align with the reported figure in 2021 at $3,427 million, and remain elevated in 2022 ($1,773 million) and 2023 ($2,025 million). The adjusted figures suggest underlying profitability is more consistently positive than the reported numbers indicate, with reduced volatility.

Total Stockholders’ Equity (Reported vs. Adjusted)

The reported total stockholders’ equity displays a downward trend from $21,239 million in 2018 to a low of $15,049 million in 2020, before recovering to approximately $21,182 million in 2023. This indicates a dip in equity during the middle years followed by restoration towards the end of the period. Adjusted equity figures, however, start significantly lower at $3,702 million in 2018 and even show negative equity values in 2019 and 2020 (-$1,208 million and -$1,968 million respectively). Thereafter, adjusted equity becomes positive and grows gradually to $3,194 million by 2023. The negative adjusted equity in earlier years could reflect substantial goodwill impairments or other adjustments impacting the equity base, with gradual recovery in the latter periods.

Return on Equity (ROE) - Reported vs. Adjusted

The reported ROE follows the net earnings trend with an initial 8.98% in 2018, a decline to 6.14% in 2019, turning negative at -2.01% in 2020, a strong rebound to 17.16% in 2021, followed by a fall to 4.37% in 2022, and a recovery to 9.56% in 2023. In contrast, adjusted ROE shows much higher values for the years data is available: 53.92% in 2018 and a dramatic increase to 205.83% in 2021, followed by declines to 72.04% in 2022 and 63.4% in 2023. The extremely high adjusted ROE percentages could be driven by low adjusted equity figures, as seen in the negative or marginal adjusted equity values, indicating that the company generates substantial returns relative to the adjusted equity base once goodwill and other adjustments are accounted for. The adjusted ROE indicates a strong profitability performance on an adjusted basis, albeit with significant fluctuations.

In summary, the financial data reflect a company experiencing considerable fluctuations in profitability and equity base over the evaluated years. The reported results show marked volatility in earnings and returns. Adjustments, primarily impacting equity and net earnings attributable to goodwill or other non-recurring factors, reveal a smoother profitability trend but highlight periods of negative adjusted equity. The adjusted data indicate underlying robust profitability relative to the adjusted equity, with exceptionally high adjusted ROE in recent years, pointing to effective capital utilization on an adjusted basis despite the volatility observed in reported figures.

Net Earnings (Loss) Trends

Reported net earnings attributable to the company exhibited notable fluctuations over the six-year period. After peaking at 1908 million USD in 2018, earnings decreased sharply to 1049 million USD in 2019 and turned negative in 2020 with a loss of 322 million USD. This loss was followed by a substantial recovery in 2021, reaching 3427 million USD, before declining again in 2022 to 868 million USD and then increasing to 2025 million USD in 2023.

Adjusted net earnings, which likely exclude certain non-recurring items and goodwill impacts, showed a smoother upward trend overall. Starting at 1996 million USD in 2018, adjusted earnings dropped to 1049 million USD in 2019 but then generally increased each year to reach 2025 million USD in 2023. The adjustments appear to moderate the 2020 loss, showing a positive 543 million USD instead, indicating significant one-time or goodwill-related charges during that year.

Total Assets Trends

Reported total assets displayed a relative stability with slight fluctuations, starting at 55493 million USD in 2018, decreasing to 51803 million USD in 2019, then steadily rising to a peak of 57699 million USD in 2021 before tapering off slightly to around 57153 million USD by 2023.

Adjusted total assets, which exclude goodwill and possibly other intangible assets, were consistently lower than reported assets, reflecting the impact of these adjustments. Adjusted assets decreased from 37956 million USD in 2018 to 33497 million USD in 2019, then increased steadily through 2023, reaching 39165 million USD. This trend suggests asset growth excluding intangible components.

Return on Assets (ROA) Analysis

The reported ROA mirrored the volatility observed in net earnings, starting at 3.44% in 2018, falling to 2.02% in 2019, turning negative at -0.6% in 2020, then rebounding sharply to 5.94% in 2021. This was followed by a decline to 1.52% in 2022, with a subsequent rise to 3.54% in 2023. This pattern reflects the company's fluctuating profitability relative to its total asset base as reported.

Adjusted ROA consistently exceeded the reported ROA, showing a more favorable and smoother performance trend. Beginning at 5.26% in 2018, it dipped to 3.13% in 2019 and 1.51% in 2020 but then surged to 8.7% in 2021. Thereafter, it dropped to 4.46% in 2022 before recovering to 5.17% in 2023. The adjusted ROA suggests stronger underlying operational efficiency when excluding goodwill and other adjustments.

Overall Insights

The data reveals that the reported figures are significantly affected by non-operational factors relating to goodwill and other adjustments, especially in 2020 when reported net earnings turned negative and reported ROA dipped below zero. Adjusted metrics provide a clearer picture of core operating performance, avoiding distortion from one-time charges or asset revaluations.

The significant rebound in profitability and asset returns in 2021 indicates a recovery phase following the financial challenges observed around 2020. However, the subsequent dip in 2022 suggests some volatility or challenges before partial recovery in 2023.

The relatively stable total asset base, combined with improving adjusted ROA in recent years, points towards effective asset utilization and operational improvements underlying the company's financial performance.