Hewlett Packard Enterprise: You Should Prefer The Converts Over The Commons
Summary
- HPE's latest earnings and outlook disappointed, causing a -16% drop in common shares and a -11% drop in mandatory convertible preferred shares.
- HPE's forward P/E ratios are below 10x, and the company is not expected to experience explosive growth, making it a 'boring' stock.
- Mandatory convertible preferred shares offer a 7.625% annual coupon and similar upside to common shares, making them more attractive in today's market.
- Long-term HPE investors should switch to mandatory convertibles to benefit from high coupons while waiting for the macroeconomic environment to improve.
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