Hewlett Packard Enterprise Co. (NYSE:HPE)

The financial data reveals several notable trends and patterns over the six-year period ending in 2023.

Market (fair) value of Hewlett Packard Enterprise

The market value exhibited some fluctuations throughout the period. Starting at approximately $35.9 billion in 2018, it rose to about $38.6 billion in 2019, indicating a short-term increase in market capitalization. However, it then declined to around $33.8 billion in 2020, reflecting a substantial drop. A moderate recovery occurred in 2021, with the value increasing slightly to $35.3 billion, but it again decreased in 2022 to $34 billion before rising to $35.5 billion in 2023. Overall, the market value did not exhibit a consistent upward or downward trend but rather a pattern of volatility with relatively small net change over the entire span.

Invested capital

Invested capital showed a gradual declining trend from 2018 to 2022. The value started at about $44.3 billion in 2018 and progressively decreased almost annually to reach approximately $41.5 billion in 2022. In 2023, there was a slight reversal with invested capital increasing to $43.3 billion. This suggests that the company had been reducing its invested capital over the years until a modest reinvestment or asset increase in the most recent year.

Market value added (MVA)

The MVA, calculated as the difference between market value and invested capital, remained negative throughout the entire period, indicating that the market value has consistently been below the invested capital. The negative MVA was greatest in 2020 at approximately -$8.7 billion, coinciding with the lowest market value and still relatively high invested capital. The smallest negative gap occurred in 2019 at about -$4.7 billion, reflecting the highest market value relative to invested capital. From 2021 onward, MVA stabilized in the range of -$7.5 billion to -$7.7 billion, suggesting persistent challenges in generating market value above invested capital.

Market Value Added (MVA)

The Market Value Added figures demonstrate a consistently negative trend throughout the entire period. Starting at -8,332 million USD in 2018, the negative value decreased in absolute terms to -4,726 million USD in 2019, indicating a temporary improvement. However, this was followed by a renewed decline in 2020 to -8,676 million USD. Subsequent years exhibit slight improvements but remain substantially negative, with values around -7,500 million USD in 2021 and 2022, and a minor further decline to -7,740 million USD in 2023. Overall, the MVA remained persistently negative, suggesting ongoing market valuation challenges relative to invested capital.

Invested Capital

The invested capital shows relative stability over the six-year period, fluctuating within a narrow range. It initiated at 44,277 million USD in 2018, experienced a gradual decrease reaching its lowest point of 41,543 million USD in 2022, before increasing again slightly to 43,254 million USD in 2023. This pattern suggests moderate variations in capital allocation or asset base size but no significant expansion or contraction overall.

MVA Spread Ratio

The MVA spread ratio remains negative for the entire duration, indicative of returns below the cost of capital. The ratio improved moderately from -18.82% in 2018 to -10.92% in 2019, signalling a brief enhancement in value creation. However, subsequent years show a marked reversal, with the spread ratio deteriorating again to -20.44% in 2020. Although slight recoveries occur thereafter, resulting in values around -18%, the ratio remains substantially below zero, confirming persistent inability to generate positive spread on invested capital.

Summary of Trends

Throughout the period analyzed, there is a clear pattern of persistent negative market value added and MVA spread ratio, reflecting challenges in generating shareholder value above invested capital costs. The temporary improvement observed in 2019 was not sustained in later years, leading to continued negative spreads and value erosion. Invested capital remained relatively stable, suggesting that changes in MVA and spread ratio are predominantly driven by market valuation shifts or profitability pressures rather than significant adjustments to capital employed.

The financial data over the analyzed periods shows distinct trends in market value added (MVA), adjusted net revenue, and MVA margin, revealing aspects of the company's financial performance and value creation.

Market Value Added (MVA)

The MVA figures remain negative throughout the entire period, ranging from -$8,332 million in 2018 to -$7,740 million in 2023. Although negative, the absolute value of MVA decreased significantly from 2018 to 2019, suggesting an improvement in value creation. However, the MVA worsened considerably in 2020, returning to levels similar to 2018. From 2021 to 2023, the MVA remains fairly stable but still negative, indicating persistent challenges in generating market value beyond the invested capital.

Adjusted Net Revenue

Adjusted net revenue shows a downward trend from 2018 to 2020, declining from $31,060 million to $27,212 million. This decline was followed by a gradual recovery from 2021 to 2023, reaching $29,668 million in 2023. Overall, despite fluctuations, the adjusted net revenue in 2023 is still below the 2018 level, indicating partial recovery but not full return to earlier revenue levels.

MVA Margin

The MVA margin remains negative across all years, consistent with the negative MVA values. It improved from -26.83% in 2018 to -16.13% in 2019, reflecting a better margin relative to revenue. Nevertheless, it deteriorated sharply in 2020 to -31.88%, then showed marginal improvement but remained below -26% from 2021 through 2023. The persistent negative margin indicates ongoing difficulties in transforming revenue into market value creation effectively.