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Western Digital (WDC) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research
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Western Digital (WDC) closed at $50.69 in the latest trading session, marking a +1.16% move from the prior day. This change outpaced the S&P 500's 0.35% gain on the day. Elsewhere, the Dow gained 0.03%, while the tech-heavy Nasdaq added 0.7%.

Prior to today's trading, shares of the maker of hard drives for businesses and personal computers had gained 1.95% over the past month. This has lagged the Computer and Technology sector's gain of 6.69% and the S&P 500's gain of 5.14% in that time.

WDC will be looking to display strength as it nears its next earnings release, which is expected to be April 29, 2019. The company is expected to report EPS of $0.49, down 86.5% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $3.69 billion, down 26.4% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $5.55 per share and revenue of $16.69 billion, which would represent changes of -62.32% and -19.16%, respectively, from the prior year.

Any recent changes to analyst estimates for WDC should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. WDC is currently sporting a Zacks Rank of #3 (Hold).

Looking at its valuation, WDC is holding a Forward P/E ratio of 9.03. This represents a discount compared to its industry's average Forward P/E of 16.

It is also worth noting that WDC currently has a PEG ratio of 0.48. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Computer- Storage Devices stocks are, on average, holding a PEG ratio of 1.49 based on yesterday's closing prices.

The Computer- Storage Devices industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 187, putting it in the bottom 27% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. 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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