Common-Size Income Statement
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- Common-Size Balance Sheet: Assets
- Analysis of Solvency Ratios
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Capital Asset Pricing Model (CAPM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Net Profit Margin since 2015
- Operating Profit Margin since 2015
- Price to Operating Profit (P/OP) since 2015
- Analysis of Revenues
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Hewlett Packard Enterprise Co., common-size consolidated income statement
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).
- Revenue Composition
- The composition of net revenue shows a relatively stable distribution between products and services over the six-year period. Products consistently contribute around 60-63% of net revenue, indicating steady demand and sales in this segment. Services represent approximately 35-37% of net revenue, exhibiting a slight increase in earlier years before stabilizing. Financing income, while a smaller component, shows a gradual increase from 1.45% in 2018 to 1.88% in 2023, suggesting a growing contribution from financing activities.
- Cost Structure
- Cost of products as a percentage of net revenue decreased from -45.63% in 2018 to -41.04% in 2023, indicating improving cost efficiency or pricing power in the product segment. Similarly, the cost of services generally declined from -23.35% to -22.5%, reflecting controlled service delivery costs. Financing cost increased slightly, rising from -0.9% to -1.31%, which could be associated with changes in borrowing costs or financing structure. Overall cost of revenue decreased from -69.88% to -64.86%, leading to an improved gross margin over the period.
- Profitability Metrics
- Gross profit margin experienced positive growth, increasing from 30.12% in 2018 to 35.14% in 2023, driven by reductions in cost of revenue. Earnings from operations exhibited volatility: a decline to negative (-1.22%) in 2020 followed by recovery to 7.17% in 2023. This fluctuation may reflect operational challenges or restructuring activities in 2020 and strategic improvements thereafter. Earnings before taxes showed a similar pattern, with a significant dip in 2020 (-1.6%) but strong rebound peaking at 12.94% in 2021 before settling to 7.69% in 2023. Net earnings attributable to the company followed this trend, dropping to losses in 2020 but improving to 6.95% by 2023.
- Operating Expenses
- Research and development expenses steadily increased from -5.39% to -8.06%, indicating intensified investment in innovation and product development. Selling, general, and administrative expenses remained relatively stable, fluctuating slightly around -16% to -17.7%, reflecting consistent overhead levels. Amortization of intangible assets decreased slightly over time from -0.95% to -0.99%, while impairment of goodwill displayed irregular and significant charges in 2020 and 2022 (-3.21%, -3.18%), which likely impacted operating results adversely in those years.
- One-Time and Other Charges
- Transformation costs peaked in 2020 at -3.52% and declined in subsequent years, indicating focus on business restructuring or strategic initiatives during that period. Disaster charges remained minimal but showed negative impact in 2022 (-0.17%). Acquisition and disposition charges were irregular but generally small, with a notable increase in 2019 (-2.6%). Litigation judgment was significant only in 2021 at 8.46%, likely providing a one-time financial impact. Separation and restructuring charges appeared infrequently with minor impact.
- Other Income and Expenses
- Interest expense showed moderate fluctuations, decreasing from -1.14% in 2018 to a low of -0.91% in 2022 but rising again to -1.12% in 2023, indicating variability in debt costs or amounts. Interest and other income remained positive but relatively small, suggesting net positive financing activities. Tax indemnification and other adjustments were volatile, with both positive and negative impacts across the years, potentially reflecting tax-related settlements or adjustments. Earnings from equity interests increased steadily, moving from 0.12% to 0.84%, supporting overall profitability.
- Overall Financial Performance
- The company demonstrated resilience despite fluctuations, showing recovery in profitability post-2020 losses. The improvement in gross margin and controlled expenses contributed to increasing net earnings by 2023. However, the rising research and development expense suggests an emphasis on future growth and innovation, which may pressure margins in the short term. The presence of significant one-time charges in some years highlights episodic challenges and restructuring efforts, but the general trend points toward stabilized and improving operational efficiency and earnings.