Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Hewlett Packard Enterprise Company's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 19.1% to 5.3% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 96, DPO 150, DIO 101). At a 6.9% WACC with mid-year discounting, the terminal value (94% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 22.2x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $81.81 per share, suggesting HPE is undervalued by 227.2% at the current price of $25.00.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 2,491 | 2,625 | 2,738 | 2,904 | 3,059 | 3,135 |
| (−) Net Interest | 418 | 440 | 459 | 487 | 513 | 526 |
| (+) D&A | 2,622 | 2,847 | 2,986 | 3,217 | 3,588 | 3,678 |
| EBITDA | 5,531 | 5,912 | 6,183 | 6,608 | 7,160 | 7,339 |
| (−) Tax | 170 | 179 | 186 | 198 | 208 | — |
| (−) CapEx | 3,624 | 3,819 | 3,983 | 4,225 | 4,450 | — |
| (−) ΔWC | -736 | 377 | 316 | 468 | 435 | — |
| Free Cash Flow (FCF) | 2,474 | 1,538 | 1,698 | 1,718 | 2,067 | — |
| Peers' EBITDA Multiple | 22.2x | |||||
| Terminal Value | 163,007 | |||||
| WACC / Discount Rate | 6.89% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 2,393 | 1,392 | 1,437 | 1,360 | 1,532 | 116,807 |
| Enterprise Value | 124,920 | |||||
| Projection Period | 8,113 | 6.5% | ||||
| Terminal Value | 116,807 | 93.5% | ||||
| (−) Current Net Debt | 16,592 | |||||
| Equity Value | 108,328 | |||||
| (÷) Outstanding Shares | 1324M | |||||
| Fair Price | $82 | +227.2% | ||||
| WACC \ EV/EBITDA Exit Multiple | 18.2x | 20.2x | 22.2x | 24.2x | 26.2x |
|---|---|---|---|---|---|
| 4.9% | $73 | $82 | $91 | $100 | $108 |
| 5.9% | $70 | $78 | $86 | $95 | $103 |
| 6.9% | $66 | $74 | $82 | $90 | $98 |
| 7.9% | $63 | $70 | $78 | $85 | $93 |
| 8.9% | $59 | $67 | $74 | $81 | $88 |
Current price: $25.00. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.