Stocks with low P/E ratios are typically viewed as less risky and more defensive, offering a sense of stability during market fluctuations.
Amid this evolving landscape, quality tech stocks Hewlett Packard Enterprise Company (HPE), AudioCodes Ltd. (AUDC), and Lantronix, Inc. (LTRX) emerge as standout opportunities. Boasting low P/E ratios and robust growth potential, these companies present compelling prospects for investors looking to capitalize on the tech sector’s ongoing expansion.
The technology sector is rapidly expanding, driven by continuous innovation and high demand for digital solutions that help businesses streamline operations and boost efficiency. Gartner forecasts worldwide IT spending to rise 8% year-over-year to $5.07 trillion this year.
Additionally, a wave of technological innovations, including IoT, 5G, blockchain, spatial computing, homomorphic encryption, the metaverse, 3D printing, additive manufacturing, robotics, and automation, is poised to drive substantial industry growth, dramatically expanding its horizons.
Considering the trends in the industry, let us discuss the fundamentals of three tech stocks with discounted P/E ratios.
Hewlett Packard Enterprise Company (HPE)
HPE is a global technology company that offers general-purpose servers, hybrid cloud solutions, wired and wireless networks, and flexible investment solutions for technology deployment models. It operates under the Server; Hybrid Cloud; Intelligent Edge; Financial Services; Corporate Investments and Other segments.
In terms of forward non-GAAP P/E, HPE is trading at 10.14x, 58.6% lower than the industry average of 24.48x. The stock’s forward EV/EBIT multiple of 11.10 is 45.6% lower than its industry average of 20.42x.
On October 29, HPE announced that TEPCO SYSTEMS, the IT and engineering arm of Tokyo Electric Power Company Holdings, had chosen the HPE GreenLake cloud platform to support decarbonization efforts. By leveraging data and AI, this collaboration aims to drive continuous innovation and develop new services, advancing TEPCO's progress toward net-zero goals.
During the fiscal 2024 third quarter that ended July 31, HPE’s net revenue increased 10.1% year-over-year to $7.71 billion. Its non-GAAP earnings from operations grew 7.4% from the year-ago value to $771 million. In addition, HPE’s non-GAAP net earnings and non-GAAP EPS rose 3.4% and 2% from the prior year’s period to $661 million and $0.50, respectively.
Street expects HPE’s revenue for the fiscal fourth quarter ending in October 2024 to increase 12.3% year-over-year to $8.26 billion. Its EPS for the ongoing quarter is expected to grow 7% from the prior year’s quarter to $0.56. Moreover, the company surpassed the consensus EPS estimates in all four trailing quarters.
Over the past year, the stock has gained 29% to close the last trading session at $19.73. It soared 16.2% year-to-date.
HPE’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
HPE has a B grade for Value and Momentum. Within the 45-stock Technology – Communication/Networking industry, the stock is ranked #9.
Click here to access additional HPE ratings for Sentiment, Growth, Quality, and Stability.
AudioCodes Ltd. (AUDC)
Headquartered in Lod, Israel, AUDC offers advanced communications software, products, and productivity solutions for the digital workplace globally. The company offers solutions, products, and services for unified communications, contact centers, hosted business services, Voice.AI, and service provider businesses.
In terms of forward non-GAAP P/E, AUDC is trading at 11.35x, 53.7% lower than the industry average of 24.48x. Its forward EV/Sales multiple of 0.95 is 69% lower than the industry average of 3.07.
On October 28, AUDC expanded its Meeting Insights solution to support Zoom, addressing the needs of organizations using multiple UCaaS platforms like Microsoft Teams and Zoom. This enhancement aims to improve collaboration and insights in today’s digital workplaces.
AUDC’s total revenues increased marginally year-over-year to $60.30 million during the second quarter that ended June 30, 2024. Its gross profit grew 2.6% from the year-ago value to $39.48 million. The company’s non-GAAP net income came in at $5.53 million and $0.18 per share, up 7.7% and 12.5% over the prior year’s quarter, respectively.
Analysts expect AUDC’s revenue and EPS for the fiscal year ending December 2024 to increase marginally and 9.9% year-over-year to $244.78 million and $0.85, respectively.
The stock climbed 27.6% over the past year, to close the last trading session at $9.56.
AUDC’s solid fundamentals are apparant in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
The stock has a B grade for Value and Stability. Within the Technology – Communication/Networking industry, AUDC is ranked #3.
In addition to the POWR Ratings we’ve stated above, we also have AUDC ratings for Quality, Growth, Momentum, and Sentiment. Get all AUDC ratings here.
Lantronix, Inc. (LTRX)
LTRX provides solutions for video surveillance, infotainment systems, and intelligent substation infrastructure. The company’s IoT offerings comprise IoT System Solutions, Embedded IoT Modules, and Software and Engineering Services.
On October 17, LTRX introduced SmartLV, the first AI-enabled IoT Edge Compute Cellular Gateway powered by the Qualcomm® IQ-615 processor. Designed for low-voltage substations and smart grid applications, SmartLV will debut at Enlit Europe on October 22–24, 2024, in Milan.
LTRX's forward non-GAAP P/E of 8.55x is 65.1% lower than the industry average of 24.48x. Its forward EV/Sales multiple of 0.96 is 68.7% lower than the 3.07 industry average.
During the fiscal 2024 fourth quarter that ended on June 30, 2024, LTRX’s net revenue increased 40.5% year-over-year to $49.08 million. The company’s non-GAAP net income amounted to $5.78 million and $0.11 per share, representing increases of 160% and 150% year-over-year, respectively.
Street expects LTRX’s revenue and EPS for the fiscal first quarter ended September 2024 to increase 9.9% and 25.7% year-over-year to $36.31 million and $0.09, respectively. Furthermore, the company surpassed consensus revenue estimates in three of the four trailing quarters.
Shares of CRM have gained 18.7% over the past year and 17.3% over the past month to close the last trading session at $4.06.
LTRX’s robust outlook is reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
LTRX has an A grade for Growth and a B for Value and Sentiment. Within the B-rated Technology – Hardware industry, it is ranked #3 out of 42 stocks.
To see LTRX’s Stability and Momentum ratings, click here.
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HPE shares were trading at $20.48 per share on Wednesday afternoon, up $0.61 (+3.07%). Year-to-date, HPE has gained 23.10%, versus a 23.66% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
3 Low P/E Ratio Stocks That Are Too Cheap to Ignore StockNews.com
