What's in Store for Western Digital (WDC) in Q2 Earnings?
Western Digital WDC is scheduled to report second-quarter fiscal 2023 results on Jan 31.
For the to-be-reported quarter, on a non-GAAP basis, the company projects between a loss of 25 cents and earnings of 5 cents per share. The Zacks Consensus Estimate is pegged at a loss of 8 cents per share, against the earnings of $2.30 per share reported in the prior-year quarter.
Western Digital expects non-GAAP revenues between $2.9 billion and $3.1 billion. The Zacks Consensus Estimate for revenues is currently pegged at $3.01 billion, indicating a decline of 37.8% from the prior-year quarter’s reported figure.
The company surpassed the Zacks Consensus Estimate in three of the last four quarters while missing once. It has a trailing four-quarter negative earnings surprise of 3.1%, on average. In the past year, shares of WDC have lost 12.3% of their value compared with the sub-industry’s decline of 15.2%.
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Factors to Note Ahead of Q2 Release
Western Digital’s fiscal second quarter performance is likely to have been affected by weakening consumer demand owing to prevailing global macroeconomic uncertainties and rising inflation. Apart from inventory corrections by consumers, persistent supply-chain troubles and economic slowdown in China related to COVID-19 continue to remain headwinds.
Moreover, declining trends witnessed in PC shipments in fourth-quarter calendar-year 2022 are likely to have negatively impacted hard disk drive (HDD) sales resulting in affecting the company’s performance in the quarter under review. Higher costs associated with ramping up next-generation energy-assisted hard drives amid stiff competition in the disk-drive market might have dented fiscal second quarter profits.
To battle macroeconomic uncertainties, WDC is focused on reducing capital investments and operating expenses to better align cash flow and cost structure with market conditions.
Coming to the product group, the Zacks Consensus Estimate for Flash revenues is pegged at $1.337 billion. Flash demand is under pressure due to inventory reduction at PC OEMs and lower flash pricing. The ramp-up of new 5G phones incorporating the company’s latest BiCS5 flash solutions and strength in the company’s SanDisk and WD Black product lines bode well.
The Zacks Consensus Estimate for fiscal second quarter HDD revenues is pegged at $1.693 billion. HDD revenues are expected to have been negatively impacted by decline in demand in other capacity enterprise product channels. However, the adoption of SMR hard drives (especially 17 terabyte per capacity enterprise drive and 20-terabyte drive exabyte shipments) remains healthy and is likely to have cushioned the segment’s performance.
Western Digital Corporation Price and EPS Surprise
Western Digital Corporation price-eps-surprise | Western Digital Corporation Quote
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 presently carries a Zacks Rank #4 (Sell). 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 model shows that these have the right combination of elements to beat on earnings this season.
Helmerich & Payne HP has an Earnings ESP of +8.68% and currently sports a Zacks Rank #1. HP is scheduled to report first quarter of fiscal 2023 earnings on Jan 31. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Helmerich & Payne’s to-be-reported quarter’s earnings and revenues are pegged at 81 cents per share and $689.3 million, respectively. The company surpassed earnings estimates in the preceding four quarters, delivering an average surprise of 124.2%. Shares of HP have gained 74% in the past year.
MSCI Inc MSCI has an Earnings ESP of +0.76% and currently has a Zacks Rank #2. MSCI is scheduled to report fourth quarter 2022 earnings on Jan 31.
The Zacks Consensus Estimate for MSCI’s to-be-reported quarter’s earnings and revenues are pegged at $2.71 per share and $565.9 million, respectively. Shares of the company have gained 1.4% in the past year.
Super Micro Computer SMCI has an Earnings ESP of +6.78% and presently carries a Zacks Rank #2. SMCI is slated to release second quarter of fiscal 2023 numbers on Jan 31.
The Zacks Consensus Estimate for SMCI’s to-be-reported quarter’s earnings and revenues are pegged at $2.95 per share and $1.77 billion, respectively. Shares of the company have gained 89.9% in the past year.
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Helmerich & Payne, Inc. (HP) : Free Stock Analysis Report
Western Digital Corporation (WDC) : Free Stock Analysis Report
MSCI Inc (MSCI) : Free Stock Analysis Report
Super Micro Computer, Inc. (SMCI) : Free Stock Analysis Report
