Stock Analysis on Net
Stock Analysis on Net

Hewlett Packard Enterprise Co. (NYSE:HPE)

This company has been moved to the archive! The financial data has not been updated since June 5, 2024.

Common-Size Income Statement

Hewlett Packard Enterprise Co., common-size consolidated income statement

Microsoft Excel
12 months ended: Oct 31, 2023 Oct 31, 2022 Oct 31, 2021 Oct 31, 2020 Oct 31, 2019 Oct 31, 2018
Products 62.12 62.44 61.23 60.28 62.36 63.22
Services 36.00 35.86 37.00 37.98 36.06 35.33
Financing income 1.88 1.69 1.78 1.74 1.57 1.45
Net revenue 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Cost of products -41.04 -43.74 -42.80 -43.35 -43.02 -45.63
Cost of services -22.50 -21.82 -22.69 -24.25 -23.38 -23.35
Financing cost -1.31 -1.09 -0.76 -1.00 -1.02 -0.90
Cost of revenue -64.86% -66.64% -66.25% -68.61% -67.42% -69.88%
Gross profit 35.14% 33.36% 33.75% 31.39% 32.58% 30.12%
Research and development -8.06 -7.18 -7.12 -6.95 -6.32 -5.39
Selling, general and administrative -17.71 -17.34 -17.74 -17.14 -16.84 -15.72
Amortization of intangible assets -0.99 -1.03 -1.27 -1.40 -0.92 -0.95
Impairment of goodwill 0.00 -3.18 0.00 -3.21 0.00 -0.29
Restructuring charges 0.00 0.00 0.00 0.00 0.00 -0.06
Transformation costs -0.97 -1.66 -3.35 -3.52 -1.55 -1.38
Disaster (charges) recoveries 0.00 -0.17 -0.06 -0.10 0.02 0.00
Acquisition, disposition and other related charges -0.24 -0.07 -0.13 -0.30 -2.60 -0.27
Separation costs 0.00 0.00 0.00 0.00 0.00 -0.04
Earnings (loss) from operations 7.17% 2.74% 4.07% -1.22% 4.37% 6.02%
Interest and other, net 0.62 0.27 0.31 0.47 0.51 0.24
Interest expense -1.12 -0.91 -1.04 -1.23 -1.07 -1.14
Tax indemnification and other adjustments 0.19 -0.24 0.23 -0.37 1.29 -4.39
Non-service net periodic benefit credit (cost) -0.01 0.47 0.25 0.50 0.20 0.00
Litigation judgment 0.00 0.00 8.46 0.00 0.00 0.00
Earnings from equity interests 0.84 0.75 0.65 0.25 0.07 0.12
Earnings (loss) before (provision) benefit for taxes 7.69% 3.09% 12.94% -1.60% 5.39% 0.86%
(Provision) benefit for taxes -0.70 -0.03 -0.58 0.44 -1.73 5.65
Net earnings (loss) from continuing operations 6.99% 3.06% 12.37% -1.15% 3.66% 6.51%
Net loss from discontinued operations 0.00 0.00 0.00 0.00 0.00 -0.34
Net earnings (loss) 6.99% 3.06% 12.37% -1.15% 3.66% 6.17%
Net (earnings) loss attributable to non-controlling interests -0.04 -0.02 -0.03 -0.04 -0.05 0.01
Net earnings (loss) attributable to HPE 6.95% 3.05% 12.33% -1.19% 3.60% 6.18%

Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).

Analysis of the common-size income statement reveals a general trend of gross margin expansion and operational volatility, influenced by non-recurring charges and strategic shifts in cost allocation over the six-year period ending October 31, 2023.

Revenue Composition
The revenue mix remains relatively stable, with product sales consistently accounting for approximately 60% to 63% of net revenue and services contributing between 35% and 38%. A slight peak in the services contribution was observed in 2020 at 37.98%, suggesting a temporary shift toward service-oriented revenue before returning to approximately 36% by 2023.
Gross Profitability
Gross profit margins exhibit a consistent upward trajectory, rising from 30.12% in 2018 to 35.14% in 2023. This improvement is primarily driven by a reduction in the cost of revenue, which decreased from 69.88% to 64.86% of net revenue over the analyzed period. The cost of products showed a notable decline from 45.63% in 2018 to 41.04% in 2023, contributing significantly to the margin expansion.
Operating Expense Trends
Research and development (R&D) spending has steadily increased as a percentage of net revenue, growing from 5.39% in 2018 to 8.06% in 2023, indicating a heightened strategic focus on innovation. Selling, general, and administrative (SG&A) expenses remained relatively constant, fluctuating within a narrow range between 15.72% and 17.74%. Transformation costs peaked in 2020 at 3.52% before declining sharply to 0.97% by 2023, suggesting the completion or optimization of major organizational restructuring initiatives.
Operating and Net Earnings Volatility
Earnings from operations have been volatile, characterized by a dip into negative territory in 2020 (-1.22%) before recovering to 7.17% in 2023. This volatility is partly attributed to periodic impairment of goodwill, which impacted results in 2020 (-3.21%) and 2022 (-3.18%). Net earnings attributable to the company were significantly skewed in 2021, reaching a peak of 12.33% due to a one-time litigation judgment of 8.46% of net revenue. Excluding this anomaly, the net earnings trend shows a recovery from the 2020 loss to a more stable 6.95% by 2023.

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