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What to Expect Ahead of Western Digital (WDC) Q2 Earnings?

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Western Digital WDC is slated to report second-quarter fiscal 2022 results on Jan 27.

For the to-be-reported quarter, the company projects non-GAAP earnings between $1.95 and $2.25 per share. The consensus mark for earnings is pegged at $2.13 per share, which suggests an increase of 208.7% from the year-ago quarter’s levels.

Western Digital expects non-GAAP revenues in the range of $4.7-$4.9 billion in the fiscal second quarter. The Zacks Consensus Estimate for revenues is currently pegged at $4.8 billion, indicating an increase of 21.8% from the prior-year quarter’s reported figure.

The company surpassed the Zacks Consensus Estimate in the last four quarters. It has a trailing four-quarter earnings surprise of 32.9%, on average. In the past year, shares of the company have increased 9.5% against the industry’s increase of 14.9%.

Western Digital Corporation Price and EPS Surprise

Western Digital Corporation Price and EPS Surprise
Western Digital Corporation Price and EPS Surprise

Western Digital Corporation price-eps-surprise | Western Digital Corporation Quote

Factors to Note Ahead of Q2 Release

Western Digital’s top-line performance is likely to have gained from continued strength in its flash and hard drive solutions amid increasing investments in digital transformation by business enterprises in the about-to-be-reported quarter.

Strong cloud data center demand and recovery in enterprise markets are expected to have positively contributed to revenues.

Western Digital’s Cloud end market segment is likely to have benefitted from continued momentum in enterprise hard drive and enterprise solid state drive or SSD revenues.

Higher demand for the latest gaming hardware and consoles is anticipated to have boosted sales of the company’s SSDs. The company’s WD Black product line is expected to have incremental adoption as gamers move toward more customized gaming solutions. Steady traction seen for SanDisk brand of retail products is expected to have positively impacted the top line performance.

Higher adoption of Western Digital’s energy-assisted drives (18 and 20 terabytes) and the company’s second-generation NVMe enterprise SSDs by cloud providers and big enterprise OEMs are expected to have favored the top line in the to-be-reported quarter.

The company’s Client-end market is likely to benefit from continued strength in flash solutions across automotive, Internet of Things (IoT), mobile, gaming and industrial applications product categories.

Coming to the company’s product group, the Zacks Consensus Estimate for Flash revenues is pegged at $2.558 billion. The projection suggests an increase of 25.8% from the prior-year quarter’s levels. Increasing demand for embedded flash solutions in virtual reality, automotive and industrial and smart home devices bode well.

Also, Flash revenues are likely to gain from higher demand for second-generation NVMe enterprise SSDs and ramp-up of new 5G phones incorporating the company’s latest BiCS5 flash solutions.

The Zacks Consensus Estimate for hard disk drive or HDD revenues for the fiscal second quarter is pegged at $2.245 billion, indicating an increase of 17.6% on a year-over-year basis. HDD revenues are expected to have benefitted mainly from demand for energy-assisted drives from cloud and enterprise customers.

Pandemic-induced supply chain troubles, component shortages and logistics bottlenecks witnessed globally are likely to have affected the company’s performance in the quarter to be reported.
Higher costs associated with the ramping up of next-generation energy-assisted hard drives and increasing COVID-19 related expenses amid stiff competition in the disk drive market might have dented fiscal second-quarter profits.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Western Digital this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Western Digital has an Earnings ESP of 0.00% and a Zacks Rank #2 (Buy). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some stocks you may consider as our proven model shows that these have the right mix of elements to beat estimates this time.

Cirrus Logic CRUS has an Earnings ESP of +1.48% and a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cirrus Logic is set to report third-quarter fiscal 2022 results on Jan 31. The Zacks Consensus Estimate for earnings is pegged at $2.15 per share, which suggests an increase of 0.9% from the prior-year quarter’s reported figure. Shares of Cirrus Logic have declined 13% in the past year.

Advanced Micro Devices AMD has an Earnings ESP of +3.47% and a Zacks Rank of 2 at present.

AMD is scheduled to release fourth-quarter 2021 results on Feb 1. The Zacks Consensus Estimate for earnings is pegged at 75 cents per share, which suggests an increase of 44.2% from the prior-year quarter’s levels. Shares of AMD have rallied 23.1% in the past year.

Electronic Arts EA has an Earnings ESP of +5.23% and a Zacks Rank of 2.

Electronic Arts is scheduled to release third-quarter fiscal 2022 results on Feb 1. The Zacks Consensus Estimate for earnings is pegged at $3.25 per share, indicating an increase of 5.2% from the year-ago quarter’s levels. Shares of Electronic Arts have declined 7.6% in the past year.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report

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Electronic Arts Inc. (EA) : Free Stock Analysis Report

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