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

Zacks Equity Research

Western Digital (WDC) closed the most recent trading day at $64.70, moving +0.62% from the previous trading session. The stock outpaced the S&P 500's daily gain of 0.29%. Elsewhere, the Dow gained 0.17%, while the tech-heavy Nasdaq added 0.3%.

Heading into today, shares of the maker of hard drives for businesses and personal computers had gained 18.13% over the past month, outpacing the Computer and Technology sector's gain of 3.47% and the S&P 500's gain of 2.99% in that time.

Investors will be hoping for strength from WDC as it approaches its next earnings release. In that report, analysts expect WDC to post earnings of $0.29 per share. This would mark a year-over-year decline of 90.46%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $3.90 billion, down 22.39% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.09 per share and revenue of $16.56 billion, which would represent changes of -36.16% and -0.06%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for WDC. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. WDC is currently sporting a Zacks Rank of #2 (Buy).

Digging into valuation, WDC currently has a Forward P/E ratio of 20.82. For comparison, its industry has an average Forward P/E of 20.82, which means WDC is trading at a no noticeable deviation to the group.

It is also worth noting that WDC currently has a PEG ratio of 10.41. 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. The Computer- Storage Devices was holding an average PEG ratio of 3.92 at yesterday's closing price.

The Computer- Storage Devices industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 79, which puts it in the top 31% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

To follow WDC in the coming trading sessions, be sure to utilize Zacks.com.


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