Dodge & Cox, a firm that invests primarily in a diversified portfolio of equity securities, trimmed its stake in Hewlett Packard Enterprise (HPE, Financial) by 7,747,840 shares for an average price of $17.51 per share during the second quarter.
The trade had a -3.46% impact on Dodge & Cox’s portfolio. It now owns 216,321,878 shares of Hewlett Packard.
Hewlett-Packard was founded in a one-car garage in Palo Alto, California, by William “Bill” Redington Hewlett and David “Dave” Packard, on Jan. 1, 1939, and it initially produced a line of electronic test equipment. Hewlett-Packard has since expanded its operations and its product lines and now provides servers, storage, networking and technology services. The company’s business segments are Enterprise Group, Software, Enterprise Services, Financial Services, and Corporate Investments.
On Nov. 1, 2015, HP Inc. (formerly known as Hewlett-Packard Company or HP Co.) spun off Hewlett Packard Enterprise pursuant to a separation agreement ("Separation and Distribution Agreement"). To effect the spinoff, HP Inc. distributed all of the shares of Hewlett Packard Enterprise common stock owned by HP Inc., to its shareholders on Nov. 1, 2015. Shareholders of HP Inc. common stock received one share of Hewlett Packard Enterprise stock for every share of HP Inc. stock held as of the record date. As a result of the spinoff, the company now operates as an independent, publicly traded company.
Hewlett Packard Enterprise has a market cap of $37.77 billion, a price-earnings (P/E) ratio of 9.48, an enterprise value of $45.37 billion, a price-book (P/B) ratio of 1.17, a price-sales (P/S) ratio of 0.78, a quick ratio of 1.41 and a dividend yield of 0.73.
According to GuruFocus, Hewlett Packard Enterprise has a 5 of 10 financial strength rating with a cash-debt ratio of 0.66, an equity-asset ratio of 0.41 and an interest coverage of 11.02 ranking it beneath 70% of the companies in the Global Communication Equipment industry. The company also has a 3 of 10 profitability and growth rating with an operating margin of 6.83%, a net-margin of 8.31%, an ROE of 12.54% and an ROC (Joel Greenblatt (Trades, Portfolio)) of 33.79% ranking it above 77% of the 530 companies in the global communication equipment industry.
Hewlett-Packard Enterprise has three medium warning signs to which investors should pay attention.
- The company’s market price is close to its one-year high.
- The company’s current P/B ratio is 1.17, which is close to its one-year high of 1.21.
- The company’s P/S ratio is currently 0.78, which has surpassed its one-year high of 0.77.
Dodge & Cox is an investment firm that seeks long-term growth of principal and income with its investments. Its secondary objective is to achieve a reasonable current income by selecting investments that are undervalued, but have a favorable outlook for long term growth.
Below is a Peter Lynch chart that shows that the Hewlett-Packard Enterprise is trading below its intrinsic value.
Disclosure:Ă‚ Author does not own any shares of this company.
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