Enterprise technology company Hewlett Packard Enterprise (NYSE: HPE) fell short of the market’s revenue expectations in Q4 CY2025, but sales rose 18.4% year on year to $9.30 billion. On the other hand, next quarter’s outlook exceeded expectations with revenue guided to $9.8 billion at the midpoint, or 2.8% above analysts’ estimates. Its non-GAAP profit of $0.65 per share was 10.8% above analysts’ consensus estimates.

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Company Overview

Born from the 2015 split of the iconic Silicon Valley pioneer Hewlett-Packard, Hewlett Packard Enterprise (NYSE: HPE) provides edge-to-cloud technology solutions that help businesses capture, analyze, and act upon their data across hybrid IT environments.

Revenue Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.

With $35.74 billion in revenue over the past 12 months, Hewlett Packard Enterprise is a behemoth in the business services sector and benefits from economies of scale, giving it an edge in distribution. This also enables it to gain more leverage on its fixed costs than smaller competitors and the flexibility to offer lower prices.

As you can see below, Hewlett Packard Enterprise grew its sales at a decent 5.9% compounded annual growth rate over the last five years. This shows its offerings generated slightly more demand than the average business services company, a useful starting point for our analysis.

Long-term growth is the most important, but within business services, a half-decade historical view may miss new innovations or demand cycles. Hewlett Packard Enterprise’s annualized revenue growth of 12.8% over the last two years is above its five-year trend, suggesting its demand recently accelerated.

This quarter, Hewlett Packard Enterprise’s revenue grew by 18.4% year on year to $9.30 billion but fell short of Wall Street’s estimates. Company management is currently guiding for a 28.5% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 16.1% over the next 12 months, an improvement versus the last two years. This projection is eye-popping for a company of its scale and indicates its newer products and services will catalyze better top-line performance.

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Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Hewlett Packard Enterprise was profitable over the last five years but held back by its large cost base. Its average operating margin of 3.9% was weak for a business services business.

Analyzing the trend in its profitability, Hewlett Packard Enterprise’s operating margin decreased by 6 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Hewlett Packard Enterprise’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

In Q4, Hewlett Packard Enterprise generated an operating margin profit margin of 5.1%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Hewlett Packard Enterprise’s EPS grew at 7.9% compounded annual growth rate over the last five years, higher than its 5.9% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Hewlett Packard Enterprise, its two-year annual EPS growth of 2% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q4, Hewlett Packard Enterprise reported adjusted EPS of $0.65, up from $0.49 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Hewlett Packard Enterprise’s full-year EPS of $2.09 to grow 15.2%.

Key Takeaways from Hewlett Packard Enterprise’s Q4 Results

We were impressed by Hewlett Packard Enterprise’s optimistic revenue guidance for next quarter, which blew past analysts’ expectations. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its revenue slightly missed. Overall, we think this was still a solid quarter with some key areas of upside. The stock traded up 2.6% to $22.46 immediately after reporting.

Indeed, Hewlett Packard Enterprise had a rock-solid quarterly earnings result, but is this stock a good investment here? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here (it’s free).