HPE Stock Worth a Second Look?
Hewlett Packard Enterprise Co (NYSE:HPE) stock is riding high on the market ahead of HPE’s first-quarter earnings call, which is due to be held after the bell today.
Investors want to know if this uptrend in the stock will continue. Well, we can’t predict that with certainty. But three strong reasons certainly make HPE stock worth a second look ahead of the HPE Q1 2016 earnings release.
The former Hewlett Packard’s decision to split its business into two separate business entities—HP Inc (NYSE:HPQ) and Hewlett Packard Enterprise—has brought forth two better investment options for investors.
Personally, I’m rooting for the latter enterprise business for one obvious reason: the revamped Hewlett Packard Enterprise Co stock holds a more promising portfolio of products. It has done away with the declining PC and printer business and now holds the more technology-forward cloud storage, servers, and networking business.
I’m seeing some strong reverse synergies resulting from this split. This corporate computing company, headed by Meg Whitman, stands a good chance of pulling growth out of the enterprise hardware segment. At the same time, the enterprise services segment could surprise us if the company is able to win more of the cloud computing market.
It’s not just me who’s bullish on HPE. In fact, smart money is also betting on HPE stock. Some of the smartest billionaire hedge fund managers have racked up HPE stock after the company’s split.
George Soros bought nearly $14.0 million worth of the stock. Ken Griffin added a whopping $117 million of the stock to his fund. David Tepper’s Appaloosa Management holds a nearly $11.0-million stake. Likewise, D.E. Shaw bought nearly $82.0 million of HPE stock. (Source: “Hewlett Packard Enterprise Co (HPE) – Hedge Fund Holdings,” Insider Monkey, March 2, 2016.)
All of these Wall Street bigwigs must see value in the company to be putting their millions on the line.
Finally, dividends are, hands down, my favorite reason to love HPE stock. Since the Hewlett Packard stock split in November of 2015, HPE has already declared two dividends. HPE’s current dividend yield stands at around 1.64%.
I believe Whitman will continue to step up dividends in the coming years and history confirms this belief: the old Hewlett Packard stock consistently returned value to shareholders through dividend payouts and buybacks for years.
As the revamped company gears up to boost its enterprise management business through better hardware and service offerings, it’s only fair to assume that its commitment to return value will also grow with its business.
In a nutshell, HPE stock is poised to go higher as reverse synergies from the split start paying off this year.