HPE Trades at a Discounted Valuation: Should You Buy the Stock?

Core Viewpoint - Hewlett Packard Enterprise (HPE) stock is currently undervalued compared to the industry average, trading at a forward 12-month P/E ratio of 9.82 versus the industry average of 19.19 [1] Group 1: Stock Performance - HPE stock has increased by 35.7% over the past year, outperforming the Zacks Computer and Technology sector and the S&P 500 index, which returned 22.2% and 21.8% respectively [3] - HPE has outperformed its peers, including Micron (MU), Seagate Technology (STX), and Advanced Micro Devices (AMD) [3] Group 2: Key Growth Drivers - The growth in HPE's stock is driven by strong performance in its GreenLake and AI systems segments [5] - GreenLake's customer base grew by approximately 34.5% year over year, reaching 39,000 customers in Q4 of fiscal 2024, contributing to an annualized revenue run rate exceeding $1.9 billion, which is a 48$6.7 billion in cumulative orders for AI products and services since Q1 of fiscal 2023, with a backlog of $3.5 billion in new AI orders as of Q4 fiscal 2024 [7] Group 3: Financial Outlook - The Zacks Consensus Estimate for HPE's fiscal 2025 revenues is$32.4 billion, indicating a year-over-year growth of 7.5%, while earnings are estimated at $2.11, reflecting a 6% growth year over year [8] - HPE has consistently beaten the Zacks Consensus Estimate in the past four quarters, with an average surprise of 7.84% [8] Group 4: Investment Recommendation - HPE's growth in GreenLake and AI, along with its attractive valuation and strong past performance, suggest it is a prudent investment opportunity [9]