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Western Digital (WDC) Gains As Market Dips: What You Should Know

Zacks Equity Research
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Western Digital (WDC) closed the most recent trading day at $44, moving +1.95% from the previous trading session. The stock outpaced the S&P 500's daily loss of 0.79%. Meanwhile, the Dow lost 0.85%, and the Nasdaq, a tech-heavy index, lost 1.11%.

Heading into today, shares of the maker of hard drives for businesses and personal computers had gained 17% over the past month, outpacing the Computer and Technology sector's gain of 12.9% and the S&P 500's gain of 13.44% in that time.

Wall Street will be looking for positivity from WDC as it approaches its next earnings report date. This is expected to be April 25, 2019. In that report, analysts expect WDC to post earnings of $1.03 per share. This would mark a year-over-year decline of 71.63%. Meanwhile, our latest consensus estimate is calling for revenue of $3.70 billion, down 26.17% from the prior-year quarter.

WDC's full-year Zacks Consensus Estimates are calling for earnings of $6.64 per share and revenue of $16.75 billion. These results would represent year-over-year changes of -54.92% and -18.9%, respectively.

Investors might also notice recent changes to analyst estimates for WDC. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.95% lower. WDC is holding a Zacks Rank of #4 (Sell) right now.

In terms of valuation, WDC is currently trading at a Forward P/E ratio of 6.5. Its industry sports an average Forward P/E of 14.19, so we one might conclude that WDC is trading at a discount comparatively.

Meanwhile, WDC's PEG ratio is currently 0.34. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. WDC's industry had an average PEG ratio of 1 as of yesterday's close.

The Computer- Storage Devices industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 168, which puts it in the bottom 35% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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