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Hewlett Packard Enterprise’s Outlook and Key Metrics

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Non-GAAP EPS between $0.20 and $0.24 expected in fiscal 1Q18

Hewlett Packard Enterprise (HPE) expects non-GAAP (generally accepted accounting principles) earnings per share (or EPS) between $0.20 and $0.24 in fiscal 1Q18. For fiscal 2018, the company has predicted EPS between $1.15 and $1.25. Wall Street analysts have an average EPS target of $0.24 for 1Q18 and $1.19 for 2018.

Shareholder return

In fiscal 4Q17, HPE returned $725 million to shareholders in the form of dividends ($105 million) and repurchases ($620 million). In fiscal 2018, HPE returned $3 billion to shareholders. HPE has a dividend yield of 2.3% with an annualized payout of $0.30 per year. HPE’s payout ratio is 25.4%. Peer companies IBM (IBM), Microsoft (MSFT), and Cisco (CSCO) have dividend yields of 4%, 2%, and 3.2%, respectively.

Fall in cash flows

HPE’s free cash flow fell significantly from $1.5 billion in 4Q16 to $400 million in 4Q17. During the company’s fiscal 4Q17 earnings call, HPE’s CFO Tim Stonesifer stated, “We ended the year with our operating company net cash balance of $5.8 billion slightly below our guided range of $6 billion to $6.5 billion due to the timing of a payment associated with the spin-merge balance sheet true-ups. We anticipate receiving this payment of approximately $200 million in Q1 of ‘18.”

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