How Hewlett-Packard Enterprise Is Increasing Shareholder Value


Nov. 30 2016, Updated 8:04 a.m. ET

Share repurchases and dividends

Hewlett-Packard Enterprise (HPE) returned over $92 million in cash to shareholders in the last fiscal quarter. In fiscal 2016, HPE returned $3 billion in capital to its shareholders, including $2.7 billion in share repurchases.

During the company’s fiscal 4Q16 earnings call, chief financial officer Tim Stonesifer said, “As part of our continued efforts to return capital to shareholders, we increased our dividend payment by 18% to $0.065 per share effective for the January 4, 2017 payment.”

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HPE’s board of directors has increased its share repurchase authorization by $3 billion. The repurchase program now stands at $4.8 billion. HPE’s dividend yield stands at 1.1%. In comparison, the dividend yields of HPE’s peers IBM (IBM), Cisco (CSCO), Microsoft (MSFT), and NetApp (NTAP) stand at 3.6%, 3.3%, 2.6%, and 3%, respectively.

Improvement in profit margins

In fiscal 4Q16, HPE’s gross margin expanded 80 basis points YoY (year-over-year) to 30.4%, driven by improvements in its Enterprise Services and Enterprise Group segments. Its non-GAAP (generally accepted accounting principles) operating profit rose 150 basis points YoY to 11.1%. As seen in the above chart, HPE’s operating margin was 9.6% in fiscal 4Q15 and 8.8% in fiscal 3Q16.

According to HPE, improvements in profit margins were driven by location mix and new deal profitability, coupled with cost improvements and streamlining efforts.


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