Hewlett Packard Enterprise Co. (NYSE:HPE)

Current Income Tax Expense

The current income tax expense exhibits a notable fluctuation over the observed periods. In 2018 and 2019, it recorded significant negative values, indicating tax benefits or credits of -1706 million USD and -575 million USD respectively. Subsequently, a reversal occurred with positive values starting from 2020, ranging from 174 million USD to 327 million USD in 2021. The figures in the latest periods, 2022 and 2023, show stabilization at around 257 million USD and 272 million USD, suggesting a trend toward consistent current tax expenses.

Deferred Income Tax Expense

The deferred income tax expense demonstrates pronounced volatility. After a minor negative figure in 2018 (-38 million USD), there is a sharp increase to a large positive amount in 2019 (1079 million USD), which contrasts starkly with the subsequent years. From 2020 to 2023, deferred tax expense values are negative and vary between -294 million USD and -67 million USD, indicating deferred tax benefits or reductions in tax liabilities in these years. This pattern suggests that deferred tax liabilities or assets are highly sensitive to underlying temporary differences or tax rate changes during the period.

Total Provision for Income Taxes

The total provision for income taxes, encompassing both current and deferred components, reflects overall instability across the years. In 2018, a substantial tax benefit of -1744 million USD was recorded, followed by a positive tax expense of 504 million USD in 2019. The subsequent years show fluctuations around zero, with values such as -120 million USD in 2020 and modest positive amounts of 160 million USD to 205 million USD in 2021 and 2023 respectively. The year 2022 records a near-neutral provision of 8 million USD. This pattern suggests shifts in taxable income, tax planning strategies, or changes in tax regulations impacting total tax expenses year over year.

Overall Insight

The data reveal considerable variability in both current and deferred tax expenses, especially pronounced in the early years of the period. The movement from large tax benefits to more moderate tax expenses implies changes in the company’s profitability, tax position, or adjustments in tax accounting policies. The significant 2019 deferred tax expense appears as an outlier, possibly related to a one-time event or reassessment of deferred tax assets/liabilities. From 2020 onward, the data suggest a stabilization with moderate but consistent tax expenses. The interplay between current and deferred tax components highlights the complexity of the company’s tax situation and the potential impact of timing differences on tax provisions.

U.S. Federal Statutory Income Tax Rate

The statutory rate remained stable at 21% from 2019 through 2023, after a decrease from 23.3% in 2018.

State Income Taxes, Net of Federal Tax Benefit

This rate fluctuated over the years, starting at 4.3% in 2018, dipping to -0.1% in 2019, and then varying moderately around low positive values, reaching 0.9% in 2023. The variability suggests changing state tax impacts and benefits over time.

Lower Rates in Other Jurisdictions, Net

This item demonstrated significant volatility. An extreme negative impact of -121.4% occurred in 2018, then moved closer to zero with smaller fluctuations, ending at -4.4% in 2023. This indicates notable tax rate differences in international operations, with their effects becoming less pronounced but still negative in recent years.

Valuation Allowance

After a significant negative impact in 2018 (-59.8%), the valuation allowance reversed to a positive rate in subsequent years, peaking at 20.8% in 2020. Thereafter, it declined into negative territory again, reaching -31.5% in 2022 and slightly improving to -2.8% in 2023, indicating fluctuating expectations of deferred tax asset realizability.

U.S. Permanent Differences

This component varied moderately, beginning with a high positive 39.3% in 2018, then decreasing and oscillating around small positive or slightly negative percentages, ending at -1.5% in 2023. This reflects the changing nature of non-deductible or non-taxable items in the U.S. tax calculation.

U.S. R&D Credit

The R&D credit effect was primarily negative or near zero with a positive spike to 8.4% in 2020, suggesting a temporary increase in credit utilization. Other years show small negative percentages, indicating ongoing but moderate tax relief from research activities.

Uncertain Tax Positions

This category showed extreme volatility, particularly a very large negative adjustment of -694.8% in 2018, followed by variations ranging from negative to positive small values in later years (-14.7% to 7.6%). By 2023, it remained slightly negative at -2%, suggesting resolution or reassessment of uncertain tax liabilities over time.

Goodwill Impairment

Data points are sparse, yet there was a marked negative impact of -41.2% in 2020 and a positive adjustment of 21.5% in 2022, indicating episodic impairment assessments affecting tax calculations in select years.

Tax Law Changes

This item peaked sharply at 158% in 2018, corresponding with major tax reform effects, then declined substantially to 24.5% in 2019 and near zero afterward, reflecting the diminishing influence of legislative changes over the period.

Other, Net

The 'Other' category remained relatively minor and stable, fluctuating minimally around zero, indicating small miscellaneous tax impacts.

Effective Tax Rate

The effective tax rate exhibited extreme volatility. Starting from a highly negative -650.7% in 2018, it rose dramatically to 32.5% in 2019 and then decreased steadily to a low of 0.9% in 2022 before increasing to 9.2% in 2023. This pattern indicates considerable fluctuations in tax expense relative to earnings, driven by the various volatile components described above.

Loss and credit carryforwards

The loss and credit carryforwards demonstrate a consistent decline from 9,149 million US$ in 2018 to 5,802 million US$ in 2023, indicating a gradual utilization or expiration of these tax attributes over the six-year period.

Inventory valuation

Inventory valuation shows minor fluctuations but an overall increasing trend, rising from 77 million US$ in 2018 to 90 million US$ in 2023. The steady upward movement suggests a modest growth or accumulation of inventory assets.

Intercompany prepayments

Intercompany prepayments display a strong upward trajectory, increasing significantly from 48 million US$ in 2018 to 325 million US$ in 2023. This growth may represent increased prepaid transactions or balances among related entities within the company.

Warranty

Warranty liabilities decrease over the period, moving from 81 million US$ in 2018 to 49 million US$ in 2023, with some variation in middle years. This downward trend might indicate improved product quality or reduced warranty claims.

Employee and retiree benefits

There is a notable reduction in employee and retiree benefits obligations, dropping markedly from 498 million US$ in 2018 to 184 million US$ in 2023. This decline suggests cost reductions or changes in benefit plans.

Restructuring

Restructuring costs exhibit volatility but an overall decreasing trend from 101 million US$ in 2018 to 52 million US$ in 2023. The fluctuations may correspond to periodic restructuring initiatives with diminishing intensity over time.

Deferred revenue

Deferred revenue values are relatively stable but tend to increase, rising from 518 million US$ in 2018 to 658 million US$ in 2023. This pattern indicates growth in prepaid or unearned income.

Intangible assets

Intangible assets experience fluctuations without a clear linear trend, starting at 48 million US$ in 2018, peaking at 130 million US$ in 2019, and settling around 107 million US$ in 2023. These changes may reflect acquisitions, amortization, or impairment activities.

Capitalized R&D

Capitalized research and development appears only in 2023 with a value of 44 million US$, suggesting a recent shift toward capitalization of R&D expenses.

Lease liabilities

Lease liabilities are first reported in 2020 at 166 million US$ and consistently grow to 209 million US$ by 2023, indicating increasing obligations related to leasing arrangements.

Other

Other liabilities or assets decrease overall from 495 million US$ in 2018 to 196 million US$ in 2023, with some interim variability. This decline suggests a reduction in miscellaneous balances over time.

Deferred tax assets

Deferred tax assets show a persistent decrease from 11,015 million US$ in 2018 to 7,716 million US$ in 2023, indicating possible realizations or adjustments reducing their carrying amount.

Valuation allowance

The valuation allowance against deferred tax assets steadily decreases in absolute terms from -8,209 million US$ in 2018 to -5,294 million US$ in 2023. This reduction suggests improved expectations regarding future realizability of deferred tax assets.

Deferred tax assets net of valuation allowance

Net deferred tax assets increase overall from 2,806 million US$ in 2018 to 2,422 million US$ in 2023, with some fluctuations in between, reflecting a relatively stable net position after adjustments for valuation allowances.

Unremitted earnings of foreign subsidiaries

Unremitted earnings of foreign subsidiaries remain negative throughout the period, with values oscillating between -161 million US$ and -190 million US$. The slight increase in negative balance towards 2023 indicates continued retention of earnings abroad.

ROU assets

Right-of-use (ROU) assets are reported starting in 2020 as negative amounts and increase in magnitude from -165 million US$ to -192 million US$ by 2023, reflecting recognition of leased assets corresponding to lease liabilities.

Fixed assets

Fixed assets are represented as negative values, decreasing in negative value from -470 million US$ in 2018 to -102 million US$ in 2023. This trend suggests disposals, depreciation, or reclassification of fixed assets.

Deferred tax liabilities

Deferred tax liabilities show a decreasing trend from -631 million US$ in 2018 to -484 million US$ in 2023, indicating a reduction in future tax obligations.

Net deferred tax assets and assets (liabilities)

The net position of deferred tax assets and liabilities rises from 2,175 million US$ in 2018 to 1,938 million US$ in 2023, displaying some fluctuations but overall relatively stable balances, supporting a consistent tax-related deferred asset/liability structure.

Deferred Tax Assets

The deferred tax assets exhibited a notable decline from 2018 to 2019, dropping from 2,403 million US dollars to 1,515 million US dollars. This was followed by a recovery phase from 2019 through 2023, with a steady increase each year, reaching 2,264 million US dollars in 2023. Overall, after the initial dip, there is an upward trend in deferred tax assets over the six-year span.

Deferred Tax Liabilities

The deferred tax liabilities showed a fluctuating pattern during the period. Starting at 228 million US dollars in 2018, they increased notably to 311 million in 2019, then decreased slightly to 290 million in 2020. A sharp increase occurred in 2021, reaching 494 million US dollars, followed by a reduction in 2022 to 320 million, and a marginal increase to 326 million in 2023. This volatility indicates variability in tax obligations or timing differences over the years.

Total Assets

The reported total assets show a fluctuating pattern with a decrease from 55,493 million USD in 2018 to 51,803 million USD in 2019, followed by a recovery and peak in 2021 at 57,699 million USD. After 2021, assets slightly decline, ending at 57,153 million USD in 2023. Adjusted total assets follow a similar trend, decreasing initially and then increasing until 2021, with a gradual decline through 2023, ending at 54,889 million USD. Overall, asset levels remain relatively stable with modest variations year over year.

Total Liabilities

Reported total liabilities have generally increased from 34,219 million USD in 2018 to a peak in 2020 at 37,919 million USD, then slightly decreased in subsequent years to 35,915 million USD by 2023. Adjusted liabilities align closely with reported figures, displaying a similar rise and modest decline trend, reaching 35,589 million USD in 2023. The overall liability trend suggests manageable fluctuation with no dramatic changes.

Stockholders’ Equity

Reported stockholders’ equity experienced a decline from 21,239 million USD in 2018 to a low of 16,049 million USD in 2020, followed by a recovery rising steadily to 21,182 million USD by 2023. Adjusted equity reflects this movement but on a slightly lower scale, dropping from 19,064 million USD in 2018 to 14,561 million USD in 2020, then rebounding to 19,244 million USD in 2023. The trend indicates a period of pressure on equity in the early years with recovery towards the latter part of the period.

Net Earnings (Loss) Attributable to HPE

Reported net earnings show significant volatility. After an initial decrease from 1,908 million USD in 2018 to 1,049 million USD in 2019, the company reported a loss of 322 million USD in 2020. This was followed by a substantial positive spike in 2021 to 3,427 million USD, then a decline to 868 million USD in 2022, and a subsequent increase to 2,025 million USD in 2023. Adjusted net earnings depict a slightly different pattern with higher earnings in 2019 (2,128 million USD), a larger loss in 2020 (-616 million USD), then a strong recovery in 2021 (3,260 million USD) before declining in 2022 and moderately recovering in 2023. The adjusted figures suggest that accounting for income tax adjustments impacts the earnings profile, especially in periods of loss and recovery.

Summary Insights

The financial data demonstrates a period characterized by initial declines in assets, equity, and earnings around 2019 and 2020, coinciding with losses recorded in both reported and adjusted net earnings. Following this period, there is a clear recovery trend through 2021 and onward, with improvements in net earnings and restoration of equity levels. Total liabilities remained relatively stable with slight increases and decreases, indicating no extraordinary changes in financial obligations. The adjusted figures, accounting for deferred income tax, reflect a consistent but slightly more conservative view of equity and earnings, highlighting the impact of tax adjustments on financial performance evaluation.

Net Profit Margin

The reported net profit margin shows notable volatility over the period, starting at 6.18% in 2018, declining to negative territory in 2020 at -1.19%, then sharply increasing to a peak of 12.33% in 2021, followed by a decline to 3.05% in 2022 before rebounding to 6.95% in 2023. The adjusted net profit margin follows a similar trend but with somewhat more pronounced fluctuations, particularly a larger dip in 2020 at -2.28% and a slightly lower margin compared to reported figures in most years. This suggests that adjustments, possibly related to tax items, have a meaningful impact during periods of negative or low profitability.

Total Asset Turnover

The reported total asset turnover remains relatively stable but shows a gradual decline from 0.56 in 2018 and 2019 to 0.48 in 2021, before a slight recovery to 0.51 by 2023. Adjusted total asset turnover maintains a slightly higher level than reported figures across all years and follows a similar declining and recovering trend. This indicates a minor reduction in asset efficiency around 2020 and 2021, with a modest improvement thereafter.

Financial Leverage

Reported financial leverage tends to increase from 2.61 in 2018 to a peak of 3.37 in 2020, then declines steadily to 2.7 in 2023. Adjusted financial leverage shows a comparable pattern but consistently records higher values than reported figures, peaking at 3.59 in 2020 before decreasing to 2.85 in 2023. This pattern suggests that the company used increasing leverage up to 2020 followed by deleveraging actions. The higher adjusted leverage may reflect off-balance sheet considerations or adjustments related to tax effects.

Return on Equity (ROE)

Reported ROE exhibits significant fluctuation, falling from 8.98% in 2018 to a negative return of -2.01% in 2020, recovering strongly to 17.16% in 2021, then declining again to 4.37% in 2022 before rebounding to 9.56% in 2023. Adjusted ROE amplifies these trends, showing a more pronounced negative low of -4.23% in 2020, a higher peak at 17.68% in 2021, but a lower trough at 3.43% in 2022 and a slightly higher recovery at 10.17% in 2023. The volatility indicates sensitivity to profit margins and leverage shifts, with the adjusted figures reflecting additional tax and accounting adjustments impacting shareholder returns.

Return on Assets (ROA)

Reported ROA follows a similar trajectory as profitability metrics, starting at 3.44% in 2018, dipping to -0.6% in 2020, rising to 5.94% in 2021, then dropping to 1.52% in 2022 before a moderate recovery to 3.54% in 2023. Adjusted ROA generally remains slightly higher than reported ROA, except during 2021 when it is marginally lower, indicating that asset profitability adjusted for deferred tax and other items generally aligns with the reported returns but smooths some volatility. The negative ROA in 2020 points to operational difficulties or large non-recurring charges affecting asset returns during that period.

Reported net earnings (loss) attributable to HPE

The reported net earnings exhibited significant volatility over the period. Starting at 1,908 million USD in 2018, there was a substantial decline to 1,049 million USD in 2019, followed by a loss of 322 million USD in 2020. In 2021, a strong recovery occurred with earnings rising to 3,427 million USD. However, this was followed by a decrease to 868 million USD in 2022 before rebounding to 2,025 million USD in 2023.

Adjusted net earnings (loss) attributable to HPE

Adjusted net earnings show a somewhat different trend, beginning at 1,870 million USD in 2018 and increasing sharply to 2,128 million USD in 2019. The company then experienced a significant adjusted net loss of 616 million USD in 2020. A recovery phase followed, with adjusted earnings climbing to 3,260 million USD in 2021. This was followed by a marked decline to 619 million USD in 2022, and a recovery to 1,958 million USD in 2023.

Reported net profit margin

The reported net profit margin trend mirrors the fluctuations in net earnings. It started at 6.18% in 2018, decreased to 3.60% in 2019, and turned negative (-1.19%) in 2020, indicating a net loss year. A strong margin recovery was observed in 2021, reaching 12.33%. This was followed by a drop to 3.05% in 2022, and a partial recovery to 6.95% in 2023.

Adjusted net profit margin

The adjusted net profit margin began at 6.06% in 2018, rose to 7.30% in 2019, but declined sharply to -2.28% in 2020, consistent with adjusted net loss figures. This margin improved significantly to 11.73% in 2021. In 2022, the margin contracted substantially to 2.17%, followed by a recovery to 6.72% in 2023.

The analysis of the annual financial data reveals several noteworthy trends in asset levels and asset turnover ratios over the review period.

Total Assets

Both reported and adjusted total assets exhibit a fluctuating but generally stable pattern. Reported total assets decreased from 55,493 million US dollars in 2018 to 51,803 million in 2019, followed by a recovery to 57,153 million in 2023. Adjusted total assets follow a similar trajectory, declining from 53,090 million in 2018 to 50,288 million in 2019 and gradually increasing back to 54,889 million by 2023. The relatively narrow gap between reported and adjusted asset values suggests consistency between reported figures and adjusted data over time.

Total Asset Turnover Ratios

Reported total asset turnover ratios decreased from 0.56 in both 2018 and 2019 to a low of 0.48 in 2021, hinting at a dip in efficiency of asset utilization during that period. This metric slightly recovered to 0.51 by 2023. The adjusted total asset turnover ratios follow a parallel trend, starting at 0.58 in 2018 and 2019, falling to 0.50 in 2021, and improving modestly to 0.53 by 2023. The consistent slight premium in adjusted turnover over reported turnover indicates that adjusted figures may incorporate factors that marginally enhance asset efficiency measurement.

Overall, the data suggest a period of asset contraction followed by gradual expansion, coupled with a dip and subsequent partial recovery in asset utilization efficiency. The trends in both reported and adjusted values are closely aligned, reflecting stability and reliability in the adjustments applied.

The analysis of the financial data reveals several trends related to the company's assets, equity, and leverage over the six-year period from 2018 to 2023.

Total Assets

Reported total assets initially declined from 55,493 million USD in 2018 to 51,803 million USD in 2019, followed by a recovery and growth to 57,699 million USD in 2021. Thereafter, reported assets slightly decreased, stabilizing around 57,123 to 57,153 million USD in 2022 and 2023. Adjusted total assets exhibited a similar pattern, decreasing from 53,090 million USD in 2018 to 50,288 million USD in 2019, then increasing steadily to 55,676 million USD in 2021, followed by a slight decline to 54,889 million USD by 2023.

Stockholders’ Equity

Reported stockholders' equity showed a significant downward trend from 21,239 million USD in 2018 to 16,049 million USD in 2020. However, equity rebounded strongly to 19,971 million USD in 2021 and remained relatively stable through 2023, closing at 21,182 million USD. Adjusted stockholders' equity followed a comparable trajectory, declining from 19,064 million USD in 2018 to 14,561 million USD in 2020 and then recovering to 19,244 million USD by 2023.

Financial Leverage

Both reported and adjusted financial leverage ratios increased from 2018 through 2020, reaching peaks of 3.37 for reported and 3.59 for adjusted ratios, indicating higher relative debt levels during this period. Subsequently, leverage ratios declined steadily from 2021 to 2023, dropping to 2.7 reported and 2.85 adjusted by the end of the analyzed period, suggesting a reduction in financial risk and improved capital structure.

Overall, the data indicate that the company experienced asset and equity contraction with increased leverage in the initial years, especially up to 2020. From 2021 onwards, recovery in equity and stabilization of assets accompanied deleveraging, which may reflect strategic financial management aimed at strengthening the balance sheet post-2020. The close alignment between reported and adjusted figures suggests consistency in the adjustments related to income tax effects, providing a reliable basis for financial evaluation.

The financial data reveals a fluctuating performance in earnings and equity over the six-year period ending October 31, 2023.

Reported Net Earnings (Loss) Attributable to HPE

The reported net earnings exhibit a notable variability, declining from 1,908 million USD in 2018 to a loss of 322 million USD by 2020. This loss reversed sharply in 2021 with a significant gain of 3,427 million USD, followed by a decline in 2022 to 868 million USD, and then a recovery to 2,025 million USD in 2023. This pattern indicates periods of volatility with a pronounced recovery after the 2020 downturn.

Adjusted Net Earnings (Loss) Attributable to HPE

Adjusted earnings show a similar trend but with generally higher values than reported earnings during the positive years. Starting at 1,870 million USD in 2018, the figure peaks at 2,128 million USD in 2019 before declining to a larger loss of 616 million USD in 2020. The adjusted earnings rebound strongly to 3,260 million USD in 2021, then decrease to 619 million USD in 2022 and rise again to 1,958 million USD in 2023. This indicates that adjustments tend to amplify both gains and losses relative to reported figures.

Reported Total HPE Stockholders’ Equity

Stockholders’ equity experienced an overall decline from 21,239 million USD in 2018 to 16,049 million USD in 2020, reflecting the negative earnings environment. Thereafter, equity rose steadily, reaching 21,182 million USD by 2023, close to the 2018 level. This recovery suggests a restoration of capital base aligned with improved profitability after 2020.

Adjusted Total HPE Stockholders’ Equity

The adjusted equity mirrors the reported equity trend, decreasing from 19,064 million USD in 2018 to 14,561 million USD in 2020, then increasing to 19,244 million USD in 2023. Throughout the period, adjusted equity remains consistently lower than reported equity, indicating that adjustments reduce the equity base relative to the reported values.

Reported Return on Equity (ROE)

The reported ROE declines from 8.98% in 2018 to -2.01% in 2020, corresponding with the net loss years. A sharp recovery to 17.16% occurs in 2021, followed by a fall to 4.37% in 2022 and a moderate increase to 9.56% in 2023. This reflects a volatile return profile consistent with net earnings trends.

Adjusted Return on Equity (ROE)

Adjusted ROE follows a similar pattern, though with generally higher peaks and deeper troughs. It increases from 9.81% in 2018 to 13.39% in 2019, falls to -4.23% in 2020, then surges to 17.68% in 2021. Subsequently, it decreases to 3.43% in 2022 before rising to 10.17% in 2023. The adjusted ROE tends to accentuate the fluctuations seen in reported ROE, reinforcing the variability evident in the company’s operational performance.

Net Earnings

The reported net earnings attributable to the company exhibited considerable volatility over the observed years. Starting at $1,908 million in 2018, earnings decreased sharply to $1,049 million in 2019 and turned negative in 2020 at a loss of $322 million. A significant recovery occurred in 2021 with earnings surging to $3,427 million. This was followed by a decline to $868 million in 2022, then another increase to $2,025 million in 2023. Adjusted net earnings displayed a similar trend but with greater fluctuation, peaking higher at $2,128 million in 2019 before dropping to a more substantial loss of $616 million in 2020. Adjusted earnings then rebounded to $3,260 million in 2021, decreased to $619 million in 2022, and rose again to $1,958 million in 2023.

Total Assets

Total assets reported showed moderate variation, beginning at $55,493 million in 2018, declining progressively to $51,803 million in 2019, and then increasing steadily through subsequent years, reaching $57,153 million by 2023. Adjusted total assets followed a similar pattern but remained consistently lower than reported totals, starting at $53,090 million in 2018 and rising to $54,889 million in 2023 after a dip in 2019 and 2020.

Return on Assets (ROA)

Reported ROA mirrored the earnings fluctuations, starting at 3.44% in 2018, dipping to 2.02% in 2019, and turning negative at -0.6% in 2020. A sharp recovery was evident in 2021 with ROA peaking at 5.94%, followed by a decline to 1.52% in 2022 and a moderate recovery to 3.54% in 2023. Adjusted ROA demonstrated a more stable but similar trend, higher in 2019 at 4.23%, negative in 2020 at -1.18%, peaking at 5.86% in 2021, then falling to 1.13% in 2022, and slightly increasing to 3.57% in 2023.

Overall Analysis

Across the six-year period, the company experienced notable volatility in its earnings and profitability metrics, particularly in 2020, where both reported and adjusted figures indicated losses and negative returns. The strong rebound in 2021 suggests one-time factors or significant operational improvements influencing performance. Total assets remained relatively stable with a slight upward trend in the latter years, indicating consistent asset management despite earnings fluctuations. The parallel movement of reported and adjusted data suggests that tax-related adjustments had an impact but did not significantly alter the overall financial trend. The data collectively reflects a cyclical pattern in profitability with recovery phases following periods of decline.