Return on Capital (ROC)
Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company debt and equity structure. It measures business productivity performance.
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- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Short-term (Operating) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Reportable Segments
- Capital Asset Pricing Model (CAPM)
- Debt to Equity since 2015
- Price to Earnings (P/E) since 2015
- Price to Book Value (P/BV) since 2015
- Analysis of Debt
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Return on Invested Capital (ROIC)
Hewlett Packard Enterprise Co., ROIC calculation, comparison to benchmarks
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | Oct 31, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net operating profit after taxes (NOPAT)1 | |||||||
| Invested capital2 | |||||||
| Performance Ratio | |||||||
| ROIC3 | |||||||
| Benchmarks | |||||||
| ROIC, Competitors4 | |||||||
| Apple Inc. | |||||||
| Arista Networks Inc. | |||||||
| Cisco Systems Inc. | |||||||
| Dell Technologies Inc. | |||||||
| Super Micro Computer Inc. | |||||||
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).
1 NOPAT. See details »
2 Invested capital. See details »
3 2023 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT values exhibit significant fluctuations over the six-year period. From 2018 to 2019, there is a modest increase from $2,346 million to $2,514 million. However, 2020 shows a sharp decline to $77 million, indicating a period of operational difficulties or unusual expenses. This is followed by a strong recovery in 2021, with NOPAT rising substantially to $3,529 million. The subsequent year, 2022, displays another decline to $818 million, before rebounding in 2023 to $2,752 million. Overall, the NOPAT trend is characterized by volatility, with significant swings that suggest instability in operational profitability or the influence of extraordinary events.
- Invested Capital
- The invested capital figures remain relatively stable over the years, with minor variations. Starting at $44,277 million in 2018, the value slightly decreases to $43,287 million in 2019 and continues a gradual decline to $42,440 million in 2020. It then slightly increases in 2021 to $42,837 million but decreases again in 2022 to $41,543 million. In 2023, there is a slight increase to $43,254 million. The overall trend is relatively flat with minor fluctuations, indicating consistent capital investment levels without drastic expansions or reductions.
- Return on Invested Capital (ROIC)
- ROIC displays considerable variability over the observed years. Beginning at 5.3% in 2018, it improves modestly to 5.81% in 2019. In 2020, ROIC plunges sharply to 0.18%, mirroring the steep decline in NOPAT, likely reflecting poor operational efficiency or adverse conditions. The ratio recovers significantly in 2021 to 8.24%, representing strong operational performance relative to invested capital. In 2022, ROIC declines again to 1.97%, corresponding with the drop in NOPAT, and then improves in 2023 to 6.36%. These fluctuations suggest that the company’s ability to generate returns on its invested capital is unstable, closely linked to the volatility seen in operating profits.
Decomposition of ROIC
Hewlett Packard Enterprise Co., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Oct 31, 2023 | = | × | × | ||||
| Oct 31, 2022 | = | × | × | ||||
| Oct 31, 2021 | = | × | × | ||||
| Oct 31, 2020 | = | × | × | ||||
| Oct 31, 2019 | = | × | × | ||||
| Oct 31, 2018 | = | × | × |
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).
1 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
- Operating Profit Margin (OPM)
- The operating profit margin demonstrates considerable volatility throughout the periods, beginning at 2.42% in 2018 and increasing sharply to 6.93% in 2019. It then experiences a significant decline to 1.2% in 2020, followed by a notable recovery and peak of 14.04% in 2021. Subsequently, the margin drops to 3.99% in 2022 but recovers again to 10.46% in 2023. This pattern reflects fluctuating operational efficiency and profitability, with peak performance in 2021 and 2023.
- Turnover of Capital (TO)
- The turnover of capital exhibits a generally stable trend, decreasing slightly from 0.7 in 2018 to 0.68 in 2019, and further dipping to 0.64 in 2020. From 2021 onwards, it stabilizes around 0.65 to 0.69, attaining 0.69 in both 2022 and 2023. This consistency suggests relatively steady efficiency in the utilization of capital assets over time, with minimal fluctuations indicating no significant changes in asset turnover.
- 1 – Effective Cash Tax Rate (CTR)
- This ratio shows a highly variable and declining trend from an exceptionally high 312.06% in 2018 to 123.8% in 2019, then sharply falling to 23.73% in 2020. It rises again to 89.96% in 2021, decreases slightly to 71.98% in 2022, and increases to 88.73% in 2023. The elevated and fluctuating values imply irregularities in cash tax obligations or the timing of tax-related cash flows, indicating volatility in tax management or tax expense recognition during this period.
- Return on Invested Capital (ROIC)
- The return on invested capital displays considerable instability, starting at 5.3% in 2018, increasing modestly to 5.81% in 2019, then plunging to a low of 0.18% in 2020. It rebounds strongly to 8.24% in 2021, declines sharply to 1.97% in 2022, and improves again to 6.36% in 2023. These swings suggest fluctuating effectiveness in generating returns from invested capital, with pronounced peaks in 2021 and dips notably in 2020 and 2022.
Operating Profit Margin (OPM)
Hewlett Packard Enterprise Co., OPM calculation, comparison to benchmarks
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | Oct 31, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net operating profit after taxes (NOPAT)1 | |||||||
| Add: Cash operating taxes2 | |||||||
| Net operating profit before taxes (NOPBT) | |||||||
| Net revenue | |||||||
| Add: Increase (decrease) in deferred revenue | |||||||
| Adjusted net revenue | |||||||
| Profitability Ratio | |||||||
| OPM3 | |||||||
| Benchmarks | |||||||
| OPM, Competitors4 | |||||||
| Apple Inc. | |||||||
| Arista Networks Inc. | |||||||
| Cisco Systems Inc. | |||||||
| Dell Technologies Inc. | |||||||
| Super Micro Computer Inc. | |||||||
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).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2023 Calculation
OPM = 100 × NOPBT ÷ Adjusted net revenue
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The NOPBT exhibits a fluctuating trend over the examined period. Starting from $752 million in 2018, it sharply increased to $2,031 million in 2019, followed by a substantial decline to $326 million in 2020. The year 2021 saw a significant recovery to $3,924 million, then decreasing to $1,137 million in 2022, and again rising to $3,102 million in 2023. This indicates volatility with alternating periods of strong profit growth and notable reductions.
- Adjusted Net Revenue
- Adjusted net revenue shows a generally declining pattern from 2018 to 2020, moving from $31,060 million to $27,212 million. After reaching this low, revenue stabilized and slightly increased in the subsequent years, reaching $29,668 million in 2023. Despite fluctuations, revenue remained within a relatively narrow band, suggesting some resilience after the initial decline.
- Operating Profit Margin (OPM)
- The operating profit margin demonstrates significant volatility. It began at 2.42% in 2018, increased to 6.93% in 2019, then declined to 1.2% in 2020. A sharp improvement occurred in 2021 when the margin peaked at 14.04%, followed by a decline to 3.99% in 2022 and a subsequent rise to 10.46% in 2023. These fluctuations reflect varying operational efficiency and profitability across the years, aligning with the NOPBT trends.
Turnover of Capital (TO)
Hewlett Packard Enterprise Co., TO calculation, comparison to benchmarks
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | Oct 31, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net revenue | |||||||
| Add: Increase (decrease) in deferred revenue | |||||||
| Adjusted net revenue | |||||||
| Invested capital1 | |||||||
| Efficiency Ratio | |||||||
| TO2 | |||||||
| Benchmarks | |||||||
| TO, Competitors3 | |||||||
| Apple Inc. | |||||||
| Arista Networks Inc. | |||||||
| Cisco Systems Inc. | |||||||
| Dell Technologies Inc. | |||||||
| Super Micro Computer Inc. | |||||||
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).
1 Invested capital. See details »
2 2023 Calculation
TO = Adjusted net revenue ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Adjusted Net Revenue
- The adjusted net revenue showed a general declining trend from 2018 to 2020, decreasing from 31,060 million US dollars in 2018 to 27,212 million in 2020. Subsequently, there was a gradual recovery, with revenue increasing to 27,949 million in 2021, 28,522 million in 2022, and reaching 29,668 million in 2023. Despite the recovery, the 2023 figure remains below the 2018 level.
- Invested Capital
- Invested capital demonstrated a fluctuating but overall declining trend over the period. Starting at 44,277 million US dollars in 2018, it decreased steadily to 42,287 million in 2019 and then to 42,440 million in 2020. A slight increase was observed in 2021 to 42,837 million, followed by a decline to 41,543 million in 2022. In 2023, invested capital rose again to 43,254 million. The fluctuations suggest moderate adjustments to invested capital over the years without a strong directional trend.
- Turnover of Capital (TO)
- The turnover of capital ratio declined steadily from 0.70 in 2018 to 0.64 in 2020, indicating decreasing efficiency in using capital to generate revenue during this period. From 2021 onwards, the ratio stabilized and slightly improved, moving to 0.65 in 2021 and 0.69 in both 2022 and 2023. This recovery suggests an enhancement in capital utilization efficiency in recent years, approaching the 2018 level.
- Overall Analysis
- The data indicates that the company experienced a contraction in adjusted net revenue and efficiency from 2018 through 2020. During these years, invested capital also decreased moderately. After 2020, revenue began to recover steadily, and capital turnover ratios improved, signaling enhanced operational efficiency. Invested capital has fluctuated without a clear trend, suggesting strategic adjustments to capital allocation. The recent improvements in revenue and turnover of capital suggest positive momentum in operational performance, though revenue has not yet returned to its early period peak.
Effective Cash Tax Rate (CTR)
Hewlett Packard Enterprise Co., CTR calculation, comparison to benchmarks
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | Oct 31, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net operating profit after taxes (NOPAT)1 | |||||||
| Add: Cash operating taxes2 | |||||||
| Net operating profit before taxes (NOPBT) | |||||||
| Tax Rate | |||||||
| CTR3 | |||||||
| Benchmarks | |||||||
| CTR, Competitors4 | |||||||
| Apple Inc. | |||||||
| Arista Networks Inc. | |||||||
| Cisco Systems Inc. | |||||||
| Dell Technologies Inc. | |||||||
| Super Micro Computer Inc. | |||||||
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).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2023 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
- Cash Operating Taxes
- The cash operating taxes exhibited a significant fluctuation over the years analyzed. In 2018 and 2019, the cash operating taxes were negative, indicating tax refunds or credits in the amounts of -1594 million and -483 million US dollars, respectively. In subsequent years, from 2020 through 2023, cash operating taxes became positive, showing an increasing trend from 249 million in 2020 to 350 million in 2023, with a peak of 394 million in 2021. This shift suggests a reversal from net tax benefit positions to consistent tax payments.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes demonstrated notable volatility. Starting with a modest profit of 752 million US dollars in 2018, the value surged significantly to 2031 million in 2019. However, in 2020, this figure declined sharply to 326 million. There was a pronounced recovery in 2021, with NOPBT rising markedly to 3924 million, followed by a decrease to 1137 million in 2022. In 2023, the profit again increased substantially to 3102 million. These fluctuations indicate variability in operating performance, possibly due to changing business conditions or operational challenges.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate showed considerable inconsistency throughout the period. The rate was deeply negative in 2018 at -212.06%, indicating tax benefits that far exceeded pre-tax profits. This rate normalized somewhat in 2019 to -23.8%, then swung to a high positive rate of 76.27% in 2020, implying tax payments exceeding the respective pre-tax profit for that year. Subsequently, the CTR stabilized at much lower levels from 2021 to 2023, with rates between approximately 10% and 28%, ending at 11.27% in 2023. This pattern reflects significant tax rate volatility, likely impacted by changes in tax regulations, loss carryforwards, or varying tax strategies.