Accounting is a subject which has become integral to our daily life. From homemakers to people in business, and politicians to entertainers, everyone must have a basic understanding of the subject(“Dell Technologies Inc. (DVMT) Earnings Per Share”). The reason why it is a compulsory subject is that accounting helps a person analyze his or her financial position. Businesses use accounting to understand whether they have earned a profit or loss. The information helps them decide for the future. This paper discusses the financial position of one company and compares it with that of its competitors.
Financial accounting is a tool for businesses to calculate its revenue; through sales. The income determines many things. It determines whether the company’s products are preferred by the target market, whether the products and company have any future in the market and should investors invest in the company. All three factors are vital for the owners of the business. If they want the business to run in the foreseeable future, they have to make sure their sales are more than their costs, so that they can make a healthy profit.
The business I have chosen to analyze is Hewlett Packard Enterprises (HPE). Hewlett Packard Enterprises is a multinational company, dealing in the information technology industry. Its headquarters are in Palo Alto, Silicon Valley, California, United States. Hewlett Packard was founded in a one-car garage, by two friends. Among the products the company built initially, its first product was the precision audio oscillator(FY17 Q2 Financial Results Press Release | Dell). The company was formerly known as Hewlett Packard, however, in 2014 the company decided to split the personal computer and printers business from the rest of the business. The move resulted in the creation of HP Inc. and HPE. From their humble start years ago, Hewlett Packard has come a long way. Today, HPE is worth billions of dollars. It shows that the business has a huge demand and the company’s brand is one of the most sought-after brands.
In an attempt to analyze the company’s financial status, I have compared it with three other companies. These three companies are HPE’s competitors; Dell Technologies, International Business Machines Corporation, and Apple Inc. Below is a table in which all four companies’ performance is given. The table shows the sales performance of all four companies and annual expected sales growth rate. It also shows the Net Income and the anticipated Earnings per Share.
|COMPANY||Hewlett Packard||Dell Tech.||Int. Business Machines Corp.||Apple Inc.|
|REVENUE||$ 28.87 billion||$ 73.44 billion||$ 78.37 billion||$ 229.23 billion|
|1-YR SALES GROWTH||10.20%||7.60%||0.90%||5.90%|
|5-YR SALES GROWTH||7.77%||24%||2.34%||10.70%|
|Net Income Avi to Common(ttm):||$ 436 million||$-5.29 billion||$11.32 billion||$ 48.35 billion|
|1-Yr EPS Growth||1.18%||5.66%||13.80%||11.44%|
|3-Yr EPS Growth||1.30%||5.55%||13.93%||12.11%|
Comparing Hewlett Packard Enterprises with Dell Technologies, it seems that Dell is leading when it comes to sales. Clearly, the margin between the two companies is quite significant. Another thing is the annual growth rate, for which an expected value is given. The annual sales growth of Dell is also more than that of HPE. Apparently, HPE lags behind when it comes to sales. Dell seems to have a better position. Additionally, HPE is back in Earnings per Share growth as well. It forecasts figures which show that Dell is expected to earn more than what HPE might receive for its investors.
Comparing HPE to International Business Machines Corp. (IBM), we get a similar result. Again, HPE lags behind in sales. However, according to the data, HPE might be in a position to earn good revenue shortly. He is more preferred by consumers than IBM is. However, it seems that IBM might get better Earnings per Share for its investors. It appears that while IBM might not be selling as well as HPE is, but its brand has the power to provide its investors with a profit for the foreseeable future.
The last company to be compared is Apple Inc. is a market leader Apple is expected to earn far more than all of its competitors. The data in the table above justifies this claim. Apple’s sales are now more than that of HPE and the remaining competitors. Though it is expected to grow in sales gradually, its current revenue still makes it a market leader. Apple’s Earnings per Share also make it a lucrative stock to invest in. Though expensive, it has the potential to make its investors rich.
Hewlett Packard Enterprises might be a brand name among the consumers, but compared to its competitors it is not able to capture the market. It is merely ready to take over a significant chunk of the market. It needs to make substantial changes in its marketing and sales sector to be able to sell more of its products. If Hewlett Packard Enterprises wants to gain the attention of more investors, it will have to do something about its Earnings per Share. Only when the EPS increases will more investors come to invest in the company.
“Dell Technologies Inc. (DVMT) Earnings Per Share.” NASDAQ.Com, http://www.nasdaq.com/symbol/dvmt/eps-forecast. Accessed 7 Dec. 2017.
FY17 Q2 Financial Results Press Release | Dell. http://www.dell.com/learn/us/en/uscorp1/secure/2016-09-06-fy17-q2-financial-results-press-release. Accessed 7 Dec. 2017.