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Western Digital Corp WDC

Morningstar Rating
$57.46 −0.02 (0.03%)
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Company Report

Western Digital Earnings: We Like Improving Growth Across HDD and Flash, but Shares Are Overpriced

We maintain our $42 fair value estimate for shares of no-moat Western Digital after its December-quarter results aligned with our longer-term recovery thesis for hard disk drive, or HDD, demand. Western met our sales expectations in the quarter and outperformed on profits, similar to peer Seagate Technology earlier in the week. Western’s HDD and flash businesses both grew sequentially in the quarter, which we see as positive evidence of recovering demand after downturns over the past two years. We expect these trends to continue through calendar 2024. We continue to see shares as overvalued and not supported by our expectations for results going forward, even as we model a robust rebound for the firm over the next two years.

Price vs Fair Value

WDC is trading within a range we consider fairly valued.
Price
$57.49
Fair Value
$68.00
Uncertainty
High
1-Star Price
$31.80
5-Star Price
$91.90
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

We expect tight NAND supply and strong pricing over the next two years to fuel sales growth and expand margins for Western Digital.

Bears

We think the HDD and flash markets are commoditylike and cyclical, leaving Western Digital vulnerable to market pricing declines that can shrink the top line and sink margins.

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News

Trading Information

Previous Close Price
$57.48
Day Range
$56.6357.80
52-Week Range
$31.9759.24
Bid/Ask
$56.62 / $57.80
Market Cap
$18.72 Bil
Volume/Avg
4.1 Mil / 5.6 Mil

Key Statistics

Price/Earnings (Normalized)
302.58
Price/Sales
1.64
Dividend Yield (Trailing)
Dividend Yield (Forward)
Total Yield

Company Profile

Western Digital is a leading vertically integrated supplier of data storage solutions, spanning both hard disk drives and solid-state drives. In the HDD market it forms a practical duopoly with Seagate, and it is the largest global producer of NAND flash chips for SSDs in a joint venture with competitor Kioxia.
Sector
Technology
Industry
Computer Hardware
Stock Style Box
Mid Value
Total Number of Employees
53,000

Competitors

Valuation

Metric
WDC
005930
STX
Price/Earnings (Normalized)
302.5810.92509.35
Price/Book Value
1.861.41
Price/Sales
1.641.692.94
Price/Cash Flow
8.81
Price/Earnings
WDC
005930
STX

Financial Strength

Metric
WDC
005930
STX
Quick Ratio
0.851.790.55
Current Ratio
1.672.591.04
Interest Coverage
−4.978.15−0.95
Quick Ratio
WDC
005930
STX

Profitability

Metric
WDC
005930
STX
Return on Assets (Normalized)
−7.86%4.31%−1.54%
Return on Equity (Normalized)
−17.65%5.57%
Return on Invested Capital (Normalized)
−8.73%4.52%3.57%
Return on Assets
WDC
005930
STX
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