Hewlett Packard Enterprise (NYSE:HPE) versus Western Digital (NASDAQ:WDC) Financial Contrast

Western Digital (NASDAQ:WDC) and Hewlett Packard Enterprise (NYSE:HPE) are both large-cap technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, institutional ownership, dividends, profitability, valuation and analyst recommendations.

Profitability

This table compares Western Digital and Hewlett Packard Enterprise’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Western Digital	72.95%	48.15%	25.79%
Hewlett Packard Enterprise	3.94%	11.91%	3.84%

Earnings and Valuation

This table compares Western Digital and Hewlett Packard Enterprise”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Western Digital	$12.92 billion	11.59	$1.89 billion	$16.75	25.93
Hewlett Packard Enterprise	$34.30 billion	2.05	$57.00 million	$1.07	49.60

Western Digital has higher earnings, but lower revenue than Hewlett Packard Enterprise. Western Digital is trading at a lower price-to-earnings ratio than Hewlett Packard Enterprise, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

92.5% of Western Digital shares are held by institutional investors. Comparatively, 80.8% of Hewlett Packard Enterprise shares are held by institutional investors. 0.2% of Western Digital shares are held by insiders. Comparatively, 0.4% of Hewlett Packard Enterprise shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Volatility and Risk

Western Digital has a beta of 2.14, indicating that its stock price is 114% more volatile than the S&P 500. Comparatively, Hewlett Packard Enterprise has a beta of 1.42, indicating that its stock price is 42% more volatile than the S&P 500.

Dividends

Western Digital pays an annual dividend of $0.60 per share and has a dividend yield of 0.1%. Hewlett Packard Enterprise pays an annual dividend of $0.57 per share and has a dividend yield of 1.1%. Western Digital pays out 3.6% of its earnings in the form of a dividend. Hewlett Packard Enterprise pays out 53.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Hewlett Packard Enterprise has increased its dividend for 2 consecutive years. Hewlett Packard Enterprise is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent recommendations for Western Digital and Hewlett Packard Enterprise, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Western Digital	0	5	18	2	2.88
Hewlett Packard Enterprise	0	7	10	0	2.59

Western Digital presently has a consensus target price of $534.56, suggesting a potential upside of 23.09%. Hewlett Packard Enterprise has a consensus target price of $69.93, suggesting a potential upside of 31.78%. Given Hewlett Packard Enterprise’s higher probable upside, analysts clearly believe Hewlett Packard Enterprise is more favorable than Western Digital.

Summary

Western Digital beats Hewlett Packard Enterprise on 12 of the 18 factors compared between the two stocks.

About Western Digital

Western Digital Corporation develops, manufactures, and sells data storage devices and solutions in the United States, China, Hong Kong, Europe, the Middle East, Africa, rest of Asia, and internationally. It offers client devices, including hard disk drives (HDDs) and solid state drives (SSDs) for desktop and notebook personal computers (PCs), gaming consoles, and set top boxes; and flash-based embedded storage products for mobile phones, tablets, notebook PCs, and other portable and wearable devices, as well as automotive, Internet of Things, industrial, and connected home applications. The company also provides enterprise HDDs; enterprise SSDs consisting of flash-based SSDs and software solutions for use in enterprise servers, online transactions, data analysis, and other enterprise applications; and data storage platforms. In addition, it offers external HDD storage products in mobile and desktop form; client portable SSDs; removable cards that are used in consumer devices comprising mobile phones, tablets, imaging systems, and cameras and smart video systems; universal serial bus flash drives for use in the computing and consumer markets; and wireless drive products used in-field backup of created content, as well as wireless streaming of high-definition movies, photos, music, and documents to tablets, smartphones, and PCs. The company sells its products under the Western Digital, SanDisk, and WD brands to original equipment manufacturers, distributors, dealers, resellers, and retailers. Western Digital Corporation was founded in 1970 and is headquartered in San Jose, California.

About Hewlett Packard Enterprise

Hewlett Packard Enterprise Company provides solutions that allow customers to capture, analyze, and act upon data seamlessly in the Americas, Europe, the Middle East, Africa, the Asia Pacific, and Japan. It operates in six segments: Compute, HPC & AI, Storage, Intelligent Edge, Financial Services, and Corporate Investments and Other. The company offers general purpose servers for multi-workload computing and workload-optimized servers; HPE ProLiant rack and tower servers; HPE Synergy; HPE Alletra, HPE GreenLake, Zerto, HPE InfoSight, and HPE CloudPhysics storage products; HPE Cray EX, HPE Cray XD, and converged edge systems; and HPE Superdome Flex, HPE Nonstop, and HPE Integrity products. It also provides HPE Aruba products that includes hardware products, such as Wi-Fi access points, switches, and gateways; HPE Aruba Networking software and services comprising cloud-based management, network management and access control, analytics and assurance, software-defined wide-area networking, network security, analytics and assurance, and location services software; and professional and support services, as well as as-a-service and consumption models. In addition, the company offers leasing, financing, IT consumption, and utility programs and asset management services for customers to facilitate technology deployment models and the acquisition of various IT solutions, including hardware, software, and services from Hewlett Packard Enterprise and others; consultative-led services; HPE Ezmeral Container Platform; HPE Ezmeral Software Container Platform and HPE Ezmeral Software Data Fabric; OpsRamp; and Hewlett Packard Labs. It serves commercial and large enterprise groups, such as business and public sector enterprises; and through various partners comprising resellers, distribution partners, original equipment manufacturers, independent software vendors, systems integrators, and advisory firms. The company was founded in 1939 and is headquartered in Spring, Texas.