Hewlett Packard Enterprise Co. (NYSE:HPE)

The analysis of the financial ratios over the six-year period reveals several notable trends in asset and equity utilization efficiency.

Net Fixed Asset Turnover

This ratio demonstrates a slight decline over the period, starting from 5.03 in 2018 and fluctuating marginally to end at 4.86 in 2023. The values illustrate a relatively stable but gently declining efficiency in generating sales from net fixed assets.

When including operating leases and right-of-use assets, the turnover ratio declines more noticeably from 5.03 in 2018 to 4.18 in 2023. The inclusion of lease assets shows a reduction in asset turnover efficiency, particularly marked between 2019 and 2020, suggesting the impact of new lease accounting standards or increased reliance on leased assets affecting asset utilization.

Total Asset Turnover

The total asset turnover ratio holds relatively steady but shows a gradual decrease from 0.56 in 2018 and 2019 down to 0.48 in 2021, with a slight recovery to 0.51 by 2023. This pattern indicates a moderate reduction in overall asset efficiency in generating revenue, with a mild improvement in the most recent years.

Equity Turnover

The equity turnover ratio experiences variability, increasing from 1.45 in 2018 to its peak at 1.7 in 2019, followed by a decline to 1.38 by 2023. This suggests fluctuating effectiveness in utilizing shareholder equity to drive revenues, with a notable decline in the later years indicating potentially less aggressive or less efficient equity deployment.

Overall, the data signals modest decreases in asset turnover metrics, especially when including lease assets, as well as some volatility in equity turnover efficiency. These trends may reflect changes in asset base composition, lease accounting effects, or shifts in operational efficiency over the time horizon analyzed.

Net Revenue

The net revenue demonstrates a fluctuating trend over the six-year period. It started at 30,852 million USD in 2018, declined steadily to a low of 26,982 million USD in 2020, then showed a recovery with increases in the subsequent years, reaching 29,135 million USD again in 2023. This indicates a contraction followed by a gradual rebound in revenue.

Property, Plant and Equipment, Net

The net value of property, plant, and equipment shows a general downward trend from 2018 through 2021, decreasing from 6,138 million USD to 5,613 million USD. From 2022 onwards, there is a slight upward movement, with the value increasing to 5,989 million USD by 2023. This pattern suggests a period of asset reduction or depreciation followed by moderate asset reinvestment or acquisition.

Net Fixed Asset Turnover Ratio

The net fixed asset turnover ratio remains relatively stable over the observed period, hovering around 4.8 to 5.03. It started at 5.03 in 2018, dipped slightly in the next two years, and then exhibited minor fluctuations without a clear directional trend, ending at 4.86 in 2023. This stability indicates consistent efficiency in utilizing fixed assets to generate sales despite fluctuations in asset values and revenue.

Net Revenue

Net revenue experienced a decline from 2018 to 2020, decreasing from 30,852 million US dollars to 26,982 million US dollars. Following this period, revenue showed a recovery trend, rising to 27,784 million in 2021 and continuing upward to 29,135 million US dollars by 2023. Despite fluctuations, the revenue in 2023 nearly returned to the 2019 level.

Property, Plant and Equipment, Net

The net value of property, plant, and equipment (including operating lease, right-of-use assets) generally increased over the analyzed period. Starting at 6,138 million US dollars in 2018, the value dipped slightly in 2019 to 6,054 million, then exhibited a steady growth from 2020 onward, reaching 6,969 million US dollars by 2023.

Net Fixed Asset Turnover

The net fixed asset turnover ratio decreased from 5.03 in 2018 to 4.12 in 2020, reflecting a reduction in revenue generated per unit of fixed assets. From 2021 to 2023, the ratio stabilized in the range of approximately 4.18 to 4.29, indicating a consistent use of fixed assets relative to revenue, though at a lower efficiency level compared to 2018.

Overall Insights

The data shows a correlation between declining net revenue and reduced asset turnover efficiency from 2018 through 2020, followed by a recovery phase in revenue without a corresponding increase in asset turnover ratio. The continuous growth in property, plant, and equipment suggests ongoing investments or asset acquisitions during the period, even as operational efficiency in turning assets into revenue remains below the initial 2018 level. This pattern may indicate strategic asset expansion or transition, with potential implications for operational productivity and capital allocation.

Net Revenue

Net revenue experienced a declining trend from 2018 to 2020, decreasing from 30,852 million US dollars in 2018 to 26,982 million in 2020. Following this decline, there was a moderate recovery over the subsequent three years, reaching 29,135 million US dollars by 2023. The revenue in 2023 nearly returned to the 2019 level.

Total Assets

Total assets showed an initial decline from 55,493 million US dollars in 2018 to 51,803 million in 2019. This was followed by a steady increase, peaking at 57,699 million in 2021 before slightly decreasing and stabilizing around 57,153 million by 2023. Overall, total assets increased moderately over the six-year period.

Total Asset Turnover

The total asset turnover ratio remained stable at 0.56 in 2018 and 2019, indicating consistent efficiency in generating revenue from assets during this period. However, the ratio declined to 0.50 in 2020 and further to 0.48 in 2021, reflecting reduced asset utilization efficiency. From 2022 onwards, there was a slight improvement, with the ratio increasing to 0.51 by 2023, though it did not recover to earlier levels.

Overall Insights

The data suggests a challenging period between 2018 and 2020, with falling revenues and asset levels, alongside declining efficiency in asset utilization. The recovery phase starting in 2021 shows a gradual improvement in revenue and asset turnover, indicating enhanced operational performance and more effective use of assets. The stabilization of total assets around 57,000 million US dollars by 2023 also suggests controlled asset management strategy in recent years.

Net Revenue

Net revenue demonstrates a declining trend from 2018 through 2020, dropping from 30,852 million US dollars to 26,982 million US dollars. This decline is followed by a recovery phase during 2021 to 2023, where revenue rises steadily to 29,135 million US dollars, effectively returning to the 2019 level by the end of the period analyzed.

Total HPE Stockholders’ Equity

Total stockholders’ equity exhibits a notable decrease from 21,239 million US dollars in 2018 to 16,049 million US dollars in 2020. Subsequently, equity increases significantly to 19,971 million US dollars in 2021, then remains relatively stable with slight fluctuations through 2022 and 2023, reaching 21,182 million US dollars by the end of 2023, closely aligning with the 2018 figure.

Equity Turnover

The equity turnover ratio initially increases from 1.45 in 2018 to a peak of 1.70 in 2019, indicating improved efficiency in generating revenue from equity. It then slightly declines to 1.68 in 2020. This is followed by a more marked decrease to 1.39 in 2021, with marginal increases in subsequent years 2022 and 2023, ending at 1.38. The overall trend from 2019 indicates a reduction in the ratio, suggesting a decline in the efficiency of equity utilization despite revenue recovery.