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HPE vs. CRM: Which Enterprise Tech Stock Should You Buy?
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The enterprise technology industry has been a hot stock option for years, and most investors interested in this space have heard of Hewlett Packard Enterprise (HPE - Free Report) and Salesforce (CRM - Free Report) . With both companies presenting positive yet distinct stock signals, which should investors hop on now? Let’s dive right into the question.
HPE is an integrated systems company focused on enterprise offerings like IT solutions, servers, and cloud-based products. The stock currently sports a “B” grade for Value and an “F” grade for Growth in our Style Scores System.
Meanwhile, Salesforce is a cloud-based software company engaged in the customer relations management business. CRM is currently holding an “A” grade for Growth and an “F” grade for Value in our Style Scores System.
HPE and Salesforce are both Zacks Rank #2 (Buy) options, so whichever direction an investor decides to move in, they can feel secure knowing that both stocks have an improving earnings outlook. Let’s break down why each stock has received their respective Style Scores to help better choose an investment strategy.
Two Different Stories
A typical value investor will most likely invest in HPE, especially when compared to Salesforce. HPE currently has a P/E ratio of 12.5, while Salesforce has a PE ratio of 59.3. This is the most popular metric used to determine value and is a measure of price divided by earnings. Here we see HP clearly trades at a discount to CRM based on this metric.
In regards to valuations, the P/B ratio is also useful and helps compare a stock’s market value with its book value. HP has a P/B ratio of 1.1, which is a strong discount to Salesforce and its P/B ratio of 9.4. These metrics highlight the huge discrepancies between HPE’s “B” grade in Value and Salesforce’s “F” in our Style Scores System.
Although these stocks may seem lopsided in these regards, Salesforce’s strength and HPE’s weakness lie in growth. Salesforce’s arguably insane PE ratio is indicative of fast growth to come in the near future to level out the price, while HPE’s P/E ratio is indicative of steady growth, but at a much slower rate.
In addition, Salesforce is expected to witness EPS growth of 24.2% on an annualized basis over the next three to five years, almost triple that of HPE’s 8.5%. This further supports the earlier notion that Salesforce stock is overvalued because of anticipation for massive growth.
Bottom Line
Both HPE and Salesforce are Zacks Rank #2 (Buy) stocks, with overall positive earnings revisions. Although this is the case, they have very distinct and polar strengths and weaknesses. Overall, HPE is the best option for value investors, while Salesforce appeals to the growth investor.
Will You Make a Fortune on the Shift to Electric Cars? Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
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HPE vs. CRM: Which Enterprise Tech Stock Should You Buy?
The enterprise technology industry has been a hot stock option for years, and most investors interested in this space have heard of Hewlett Packard Enterprise (HPE - Free Report) and Salesforce (CRM - Free Report) . With both companies presenting positive yet distinct stock signals, which should investors hop on now? Let’s dive right into the question.
HPE is an integrated systems company focused on enterprise offerings like IT solutions, servers, and cloud-based products. The stock currently sports a “B” grade for Value and an “F” grade for Growth in our Style Scores System.
Meanwhile, Salesforce is a cloud-based software company engaged in the customer relations management business. CRM is currently holding an “A” grade for Growth and an “F” grade for Value in our Style Scores System.
HPE and Salesforce are both Zacks Rank #2 (Buy) options, so whichever direction an investor decides to move in, they can feel secure knowing that both stocks have an improving earnings outlook. Let’s break down why each stock has received their respective Style Scores to help better choose an investment strategy.
Two Different Stories
A typical value investor will most likely invest in HPE, especially when compared to Salesforce. HPE currently has a P/E ratio of 12.5, while Salesforce has a PE ratio of 59.3. This is the most popular metric used to determine value and is a measure of price divided by earnings. Here we see HP clearly trades at a discount to CRM based on this metric.
In regards to valuations, the P/B ratio is also useful and helps compare a stock’s market value with its book value. HP has a P/B ratio of 1.1, which is a strong discount to Salesforce and its P/B ratio of 9.4. These metrics highlight the huge discrepancies between HPE’s “B” grade in Value and Salesforce’s “F” in our Style Scores System.
Although these stocks may seem lopsided in these regards, Salesforce’s strength and HPE’s weakness lie in growth. Salesforce’s arguably insane PE ratio is indicative of fast growth to come in the near future to level out the price, while HPE’s P/E ratio is indicative of steady growth, but at a much slower rate.
In addition, Salesforce is expected to witness EPS growth of 24.2% on an annualized basis over the next three to five years, almost triple that of HPE’s 8.5%. This further supports the earlier notion that Salesforce stock is overvalued because of anticipation for massive growth.
Bottom Line
Both HPE and Salesforce are Zacks Rank #2 (Buy) stocks, with overall positive earnings revisions. Although this is the case, they have very distinct and polar strengths and weaknesses. Overall, HPE is the best option for value investors, while Salesforce appeals to the growth investor.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>