As of June 4, 2025, Hewlett Packard Enterprise Co's estimated intrinsic value ranges from $14.51 to $24.51 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $24.51 | +38.6% |
| Discounted Cash Flow (5Y) | $21.58 | +22.0% |
| Dividend Discount Model (Multi-Stage) | $14.51 | -18.0% |
| Dividend Discount Model (Stable) | $15.99 | -9.6% |
| Earnings Power Value | $17.41 | -1.6% |
Is Hewlett Packard Enterprise Co (HPE) undervalued or overvalued?
With the current market price at $17.69, the stock appears to be moderately undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Hewlett Packard Enterprise Co's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.32 | 1.72 |
| Cost of equity | 9.9% | 14.5% |
| Cost of debt | 4.5% | 6.1% |
| Tax rate | 7.3% | 10.6% |
| Debt/Equity ratio | 0.8 | 0.8 |
| After-tax WACC | 7.4% | 10.5% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $22 | $32,794M | 68.1% |
| 10-Year Growth | $25 | $36,645M | 47.6% |
| 5-Year EBITDA | $37 | $53,127M | 80.3% |
| 10-Year EBITDA | $37 | $53,280M | 64.0% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $2,363M |
| Discount Rate (WACC) | 10.5% - 7.4% |
| Enterprise Value | $22,565M - $32,056M |
| Net Debt | $4,446M |
| Equity Value | $18,119M - $27,610M |
| Outstanding Shares | 1,314M |
| Fair Value | $14 - $21 |
| Selected Fair Value | $17.41 |
| Metric | Value |
|---|---|
| Market Capitalization | $23237M |
| Enterprise Value | $27683M |
| Trailing P/E | 8.24 |
| Forward P/E | 8.14 |
| Trailing EV/EBITDA | 10.15 |
| Current Dividend Yield | 309.71% |
| Dividend Growth Rate (5Y) | 2.27% |
| Debt-to-Equity Ratio | 0.80 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $7.35 |
| Discounted Cash Flow (5Y) | 25% | $5.40 |
| Dividend Discount Model (Multi-Stage) | 20% | $2.90 |
| Dividend Discount Model (Stable) | 15% | $2.40 |
| Earnings Power Value | 10% | $1.74 |
| Weighted Average | 100% | $19.79 |
Based on our comprehensive valuation analysis, Hewlett Packard Enterprise Co's weighted average intrinsic value is $19.79, which is approximately 11.9% above the current market price of $17.69.
Key investment considerations:
Given these factors, we believe Hewlett Packard Enterprise Co is currently moderately undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.