Intrinsic value of Hewlett Packard Enterprise - HPE

Previous Close

$14.22

  Intrinsic Value

$66.85

stock screener

  Rating & Target

str. buy

+370%

Previous close

$14.22

 
Intrinsic value

$66.85

 
Up/down potential

+370%

 
Rating

str. buy

We calculate the intrinsic value of HPE stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 22.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  9.70
  9.23
  8.81
  8.43
  8.08
  7.78
  7.50
  7.25
  7.02
  6.82
  6.64
  6.47
  6.33
  6.19
  6.08
  5.97
  5.87
  5.78
  5.71
  5.63
  5.57
  5.51
  5.46
  5.42
  5.37
  5.34
  5.30
  5.27
  5.25
  5.22
Revenue, $m
  31,671
  34,595
  37,642
  40,813
  44,113
  47,542
  51,107
  54,811
  58,661
  62,662
  66,822
  71,149
  75,650
  80,337
  85,217
  90,303
  95,605
  101,134
  106,904
  112,928
  119,220
  125,794
  132,666
  139,852
  147,369
  155,234
  163,468
  172,088
  181,115
  190,572
Variable operating expenses, $m
  12,552
  13,539
  14,568
  15,639
  16,754
  17,912
  19,116
  20,367
  21,667
  23,018
  22,567
  24,028
  25,549
  27,131
  28,780
  30,497
  32,288
  34,155
  36,104
  38,138
  40,263
  42,483
  44,804
  47,231
  49,770
  52,426
  55,206
  58,118
  61,166
  64,360
Fixed operating expenses, $m
  17,091
  17,467
  17,851
  18,244
  18,645
  19,055
  19,475
  19,903
  20,341
  20,788
  21,246
  21,713
  22,191
  22,679
  23,178
  23,688
  24,209
  24,742
  25,286
  25,842
  26,411
  26,992
  27,586
  28,193
  28,813
  29,447
  30,095
  30,757
  31,433
  32,125
Total operating expenses, $m
  29,643
  31,006
  32,419
  33,883
  35,399
  36,967
  38,591
  40,270
  42,008
  43,806
  43,813
  45,741
  47,740
  49,810
  51,958
  54,185
  56,497
  58,897
  61,390
  63,980
  66,674
  69,475
  72,390
  75,424
  78,583
  81,873
  85,301
  88,875
  92,599
  96,485
Operating income, $m
  2,029
  3,589
  5,222
  6,930
  8,714
  10,575
  12,517
  14,541
  16,653
  18,855
  23,009
  25,407
  27,911
  30,526
  33,260
  36,118
  39,108
  42,237
  45,514
  48,948
  52,546
  56,319
  60,276
  64,428
  68,786
  73,362
  78,167
  83,213
  88,516
  94,087
EBITDA, $m
  5,989
  7,744
  9,580
  11,498
  13,501
  15,590
  17,769
  20,040
  22,407
  24,875
  27,450
  30,135
  32,938
  35,865
  38,923
  42,119
  45,461
  48,958
  52,619
  56,452
  60,469
  64,679
  69,093
  73,722
  78,580
  83,678
  89,030
  94,650
  100,552
  106,752
Interest expense (income), $m
  415
  758
  958
  1,165
  1,382
  1,607
  1,841
  2,085
  2,338
  2,601
  2,874
  3,158
  3,454
  3,761
  4,080
  4,413
  4,760
  5,121
  5,497
  5,890
  6,300
  6,727
  7,174
  7,641
  8,129
  8,639
  9,173
  9,731
  10,316
  10,928
  11,569
Earnings before tax, $m
  1,271
  2,631
  4,057
  5,548
  7,107
  8,734
  10,432
  12,204
  14,052
  15,981
  19,851
  21,953
  24,150
  26,446
  28,846
  31,358
  33,987
  36,740
  39,624
  42,648
  45,819
  49,145
  52,635
  56,300
  60,147
  64,189
  68,435
  72,898
  77,588
  82,518
Tax expense, $m
  343
  710
  1,095
  1,498
  1,919
  2,358
  2,817
  3,295
  3,794
  4,315
  5,360
  5,927
  6,520
  7,140
  7,789
  8,467
  9,176
  9,920
  10,699
  11,515
  12,371
  13,269
  14,212
  15,201
  16,240
  17,331
  18,478
  19,682
  20,949
  22,280
Net income, $m
  928
  1,921
  2,962
  4,050
  5,188
  6,376
  7,615
  8,909
  10,258
  11,666
  14,491
  16,026
  17,629
  19,305
  21,058
  22,891
  24,810
  26,820
  28,926
  31,133
  33,448
  35,876
  38,424
  41,099
  43,908
  46,858
  49,958
  53,215
  56,639
  60,238

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  67,386
  73,606
  80,088
  86,837
  93,856
  101,154
  108,738
  116,620
  124,810
  133,323
  142,174
  151,380
  160,958
  170,929
  181,314
  192,134
  203,414
  215,179
  227,456
  240,273
  253,659
  267,647
  282,268
  297,557
  313,551
  330,286
  347,803
  366,144
  385,352
  405,473
Adjusted assets (=assets-cash), $m
  67,386
  73,606
  80,088
  86,837
  93,856
  101,154
  108,738
  116,620
  124,810
  133,323
  142,174
  151,380
  160,958
  170,929
  181,314
  192,134
  203,414
  215,179
  227,456
  240,273
  253,659
  267,647
  282,268
  297,557
  313,551
  330,286
  347,803
  366,144
  385,352
  405,473
Revenue / Adjusted assets
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
Average production assets, $m
  16,628
  18,162
  19,762
  21,427
  23,159
  24,960
  26,831
  28,776
  30,797
  32,898
  35,082
  37,353
  39,716
  42,177
  44,739
  47,409
  50,192
  53,095
  56,125
  59,287
  62,590
  66,042
  69,650
  73,422
  77,369
  81,498
  85,820
  90,346
  95,086
  100,050
Working capital, $m
  -3,516
  -3,840
  -4,178
  -4,530
  -4,896
  -5,277
  -5,673
  -6,084
  -6,511
  -6,955
  -7,417
  -7,897
  -8,397
  -8,917
  -9,459
  -10,024
  -10,612
  -11,226
  -11,866
  -12,535
  -13,233
  -13,963
  -14,726
  -15,524
  -16,358
  -17,231
  -18,145
  -19,102
  -20,104
  -21,154
Total debt, $m
  17,737
  21,580
  25,587
  29,757
  34,095
  38,605
  43,292
  48,163
  53,225
  58,486
  63,956
  69,645
  75,564
  81,726
  88,144
  94,831
  101,802
  109,073
  116,660
  124,581
  132,854
  141,498
  150,534
  159,982
  169,866
  180,209
  191,034
  202,369
  214,240
  226,674
Total liabilities, $m
  41,645
  45,488
  49,495
  53,665
  58,003
  62,513
  67,200
  72,071
  77,133
  82,394
  87,864
  93,553
  99,472
  105,634
  112,052
  118,739
  125,710
  132,981
  140,568
  148,489
  156,762
  165,406
  174,442
  183,890
  193,774
  204,117
  214,942
  226,277
  238,148
  250,582
Total equity, $m
  25,742
  28,117
  30,594
  33,172
  35,853
  38,641
  41,538
  44,549
  47,677
  50,929
  54,311
  57,827
  61,486
  65,295
  69,262
  73,395
  77,704
  82,198
  86,888
  91,784
  96,898
  102,241
  107,826
  113,667
  119,776
  126,169
  132,861
  139,867
  147,204
  154,891
Total liabilities and equity, $m
  67,387
  73,605
  80,089
  86,837
  93,856
  101,154
  108,738
  116,620
  124,810
  133,323
  142,175
  151,380
  160,958
  170,929
  181,314
  192,134
  203,414
  215,179
  227,456
  240,273
  253,660
  267,647
  282,268
  297,557
  313,550
  330,286
  347,803
  366,144
  385,352
  405,473
Debt-to-equity ratio
  0.690
  0.770
  0.840
  0.900
  0.950
  1.000
  1.040
  1.080
  1.120
  1.150
  1.180
  1.200
  1.230
  1.250
  1.270
  1.290
  1.310
  1.330
  1.340
  1.360
  1.370
  1.380
  1.400
  1.410
  1.420
  1.430
  1.440
  1.450
  1.460
  1.460
Adjusted equity ratio
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  928
  1,921
  2,962
  4,050
  5,188
  6,376
  7,615
  8,909
  10,258
  11,666
  14,491
  16,026
  17,629
  19,305
  21,058
  22,891
  24,810
  26,820
  28,926
  31,133
  33,448
  35,876
  38,424
  41,099
  43,908
  46,858
  49,958
  53,215
  56,639
  60,238
Depreciation, amort., depletion, $m
  3,961
  4,155
  4,357
  4,568
  4,787
  5,015
  5,252
  5,498
  5,754
  6,020
  4,441
  4,728
  5,027
  5,339
  5,663
  6,001
  6,353
  6,721
  7,104
  7,505
  7,923
  8,360
  8,816
  9,294
  9,793
  10,316
  10,863
  11,436
  12,036
  12,665
Funds from operations, $m
  4,888
  6,075
  7,319
  8,618
  9,975
  11,391
  12,867
  14,407
  16,012
  17,686
  18,932
  20,754
  22,657
  24,644
  26,721
  28,892
  31,164
  33,541
  36,030
  38,638
  41,370
  44,235
  47,240
  50,393
  53,701
  57,174
  60,821
  64,651
  68,675
  72,903
Change in working capital, $m
  -311
  -324
  -338
  -352
  -366
  -381
  -396
  -411
  -427
  -444
  -462
  -480
  -500
  -520
  -542
  -564
  -588
  -614
  -640
  -669
  -698
  -730
  -763
  -798
  -834
  -873
  -914
  -957
  -1,002
  -1,050
Cash from operations, $m
  5,199
  6,400
  7,657
  8,970
  10,342
  11,772
  13,263
  14,818
  16,440
  18,130
  19,393
  21,234
  23,157
  25,164
  27,263
  29,457
  31,752
  34,155
  36,671
  39,306
  42,069
  44,965
  48,003
  51,190
  54,535
  58,047
  61,735
  65,608
  69,677
  73,953
Maintenance CAPEX, $m
  -1,918
  -2,105
  -2,299
  -2,501
  -2,712
  -2,932
  -3,159
  -3,396
  -3,643
  -3,898
  -4,164
  -4,441
  -4,728
  -5,027
  -5,339
  -5,663
  -6,001
  -6,353
  -6,721
  -7,104
  -7,505
  -7,923
  -8,360
  -8,816
  -9,294
  -9,793
  -10,316
  -10,863
  -11,436
  -12,036
New CAPEX, $m
  -1,475
  -1,535
  -1,600
  -1,665
  -1,732
  -1,801
  -1,871
  -1,945
  -2,021
  -2,101
  -2,184
  -2,271
  -2,363
  -2,460
  -2,562
  -2,670
  -2,783
  -2,903
  -3,029
  -3,163
  -3,303
  -3,451
  -3,608
  -3,773
  -3,946
  -4,129
  -4,322
  -4,526
  -4,740
  -4,965
Cash from investing activities, $m
  -3,393
  -3,640
  -3,899
  -4,166
  -4,444
  -4,733
  -5,030
  -5,341
  -5,664
  -5,999
  -6,348
  -6,712
  -7,091
  -7,487
  -7,901
  -8,333
  -8,784
  -9,256
  -9,750
  -10,267
  -10,808
  -11,374
  -11,968
  -12,589
  -13,240
  -13,922
  -14,638
  -15,389
  -16,176
  -17,001
Free cash flow, $m
  1,806
  2,760
  3,758
  4,804
  5,897
  7,040
  8,232
  9,477
  10,776
  12,132
  13,045
  14,522
  16,065
  17,677
  19,362
  21,124
  22,968
  24,898
  26,920
  29,039
  31,261
  33,591
  36,035
  38,601
  41,295
  44,124
  47,096
  50,219
  53,502
  56,952
Issuance/(repayment) of debt, $m
  3,705
  3,844
  4,006
  4,171
  4,338
  4,510
  4,687
  4,871
  5,062
  5,261
  5,470
  5,689
  5,919
  6,162
  6,418
  6,687
  6,971
  7,271
  7,587
  7,921
  8,273
  8,644
  9,036
  9,449
  9,884
  10,343
  10,826
  11,335
  11,870
  12,435
Issuance/(repurchase) of shares, $m
  1,348
  455
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  5,053
  4,299
  4,006
  4,171
  4,338
  4,510
  4,687
  4,871
  5,062
  5,261
  5,470
  5,689
  5,919
  6,162
  6,418
  6,687
  6,971
  7,271
  7,587
  7,921
  8,273
  8,644
  9,036
  9,449
  9,884
  10,343
  10,826
  11,335
  11,870
  12,435
Total cash flow (excl. dividends), $m
  6,859
  7,060
  7,765
  8,974
  10,235
  11,549
  12,919
  14,348
  15,838
  17,393
  18,515
  20,211
  21,984
  23,839
  25,779
  27,811
  29,939
  32,169
  34,508
  36,960
  39,534
  42,235
  45,071
  48,050
  51,179
  54,467
  57,922
  61,554
  65,372
  69,386
Retained Cash Flow (-), $m
  -2,276
  -2,376
  -2,476
  -2,578
  -2,681
  -2,788
  -2,897
  -3,011
  -3,129
  -3,252
  -3,381
  -3,517
  -3,659
  -3,809
  -3,967
  -4,133
  -4,309
  -4,494
  -4,690
  -4,896
  -5,114
  -5,343
  -5,585
  -5,840
  -6,109
  -6,393
  -6,692
  -7,006
  -7,337
  -7,686
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  4,583
  4,684
  5,288
  6,396
  7,554
  8,762
  10,022
  11,337
  12,709
  14,141
  15,134
  16,695
  18,325
  20,030
  21,812
  23,677
  25,630
  27,675
  29,818
  32,064
  34,420
  36,892
  39,486
  42,209
  45,070
  48,074
  51,230
  54,548
  58,035
  61,700
Discount rate, %
  5.20
  5.46
  5.73
  6.02
  6.32
  6.64
  6.97
  7.32
  7.68
  8.07
  8.47
  8.89
  9.34
  9.81
  10.30
  10.81
  11.35
  11.92
  12.51
  13.14
  13.80
  14.49
  15.21
  15.97
  16.77
  17.61
  18.49
  19.41
  20.38
  21.40
PV of cash for distribution, $m
  4,357
  4,211
  4,474
  5,063
  5,560
  5,959
  6,254
  6,444
  6,528
  6,509
  6,188
  6,005
  5,741
  5,407
  5,016
  4,582
  4,121
  3,646
  3,173
  2,714
  2,281
  1,881
  1,521
  1,205
  934
  709
  525
  380
  267
  183
Current shareholders' claim on cash, %
  94.2
  92.5
  92.5
  92.5
  92.5
  92.5
  92.5
  92.5
  92.5
  92.5
  92.5
  92.5
  92.5
  92.5
  92.5
  92.5
  92.5
  92.5
  92.5
  92.5
  92.5
  92.5
  92.5
  92.5
  92.5
  92.5
  92.5
  92.5
  92.5
  92.5

Hewlett Packard Enterprise Company is a provider of technology solutions. The Company’s segments include: Enterprise Group, Software, Financial Services and Corporate Investments. The Enterprise Group segment provides its customers with the technology infrastructure they need to optimize traditional information technology (IT). The Software segment allows its customers to automate IT operations to simplify, accelerate and secure business processes and drives the analytics that turn raw data into actionable knowledge. The Financial Services segment enables flexible IT consumption models, financial architectures and customized investment solutions for its customers. The Corporate Investments segment includes Hewlett Packard Labs and certain business incubation projects, among others.

FINANCIAL RATIOS  of  Hewlett Packard Enterprise (HPE)

Valuation Ratios
P/E Ratio 65.9
Price to Sales 0.8
Price to Book 1
Price to Tangible Book
Price to Cash Flow 25.5
Price to Free Cash Flow -10.1
Growth Rates
Sales Growth Rate -4.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -4.4%
Cap. Spend. - 3 Yr. Gr. Rate -2.8%
Financial Strength
Quick Ratio 3
Current Ratio 0
LT Debt to Equity 43.4%
Total Debt to Equity 59.8%
Interest Coverage 2
Management Effectiveness
Return On Assets 1.4%
Ret/ On Assets - 3 Yr. Avg. 3.3%
Return On Total Capital 0.8%
Ret/ On T. Cap. - 3 Yr. Avg. 4.3%
Return On Equity 1.3%
Return On Equity - 3 Yr. Avg. 6%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 30.1%
Gross Margin - 3 Yr. Avg. 31.6%
EBITDA Margin 12.9%
EBITDA Margin - 3 Yr. Avg. 20%
Operating Margin 2.2%
Oper. Margin - 3 Yr. Avg. 7.5%
Pre-Tax Margin 0.9%
Pre-Tax Margin - 3 Yr. Avg. 6.6%
Net Profit Margin 1.2%
Net Profit Margin - 3 Yr. Avg. 6.5%
Effective Tax Rate -60.3%
Eff/ Tax Rate - 3 Yr. Avg. -26.9%
Payout Ratio 124.4%

HPE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HPE stock intrinsic value calculation we used $28871 million for the last fiscal year's total revenue generated by Hewlett Packard Enterprise. The default revenue input number comes from 0001 income statement of Hewlett Packard Enterprise. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our HPE stock valuation model: a) initial revenue growth rate of 9.7% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 5.2%, whose default value for HPE is calculated based on our internal credit rating of Hewlett Packard Enterprise, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Hewlett Packard Enterprise.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of HPE stock the variable cost ratio is equal to 40.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $16723 million in the base year in the intrinsic value calculation for HPE stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Hewlett Packard Enterprise.

Corporate tax rate of 27% is the nominal tax rate for Hewlett Packard Enterprise. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the HPE stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for HPE are equal to 52.5%.

Life of production assets of 7.9 years is the average useful life of capital assets used in Hewlett Packard Enterprise operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for HPE is equal to -11.1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $23466 million for Hewlett Packard Enterprise - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 1553.2 million for Hewlett Packard Enterprise is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Hewlett Packard Enterprise at the current share price and the inputted number of shares is $22.1 billion.

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