Western Digital Corp.

Western Digital Corp. (WDC - Analyst Report) is selling more hard drives than it did last year and holding revenue steady, helping the company produce better than expected Q2 earnings and sending estimates higher.

Company Description

Western Digital Corp. designs and manufactures hard drives worldwide. The company was founded in 1970 and has a market cap of $7.56 billion.

Shares of WDC have been on a tear for the last 4 months, almost quadrupling in price after bottoming out below $10 in early March. The company's better than expected second-quarter results, reported on July 28, provided an extra pop.

Second-Quarter Results

Revenue was down marginally to $1.9 billion from $2.0 billion last year. But earnings came in better than expected at 76 cents per share, 49 cents ahead of the Zacks Consensus Estimate.

Western Digital has been a steady player in a choppy economy, beating in each of the last 4 quarters by an average of 25 cents, or 106%.

The company noted that it shipped 40 million drives during the quarter, up from 35.2 million last year.

Estimates Are Up

The analysts liked what they saw and raised their earnings projections. The current-year estimate is up 15 cents to $3.19 per share. The next-year estimate is bullish, up 48 cents in the last 60 days to $3.71, a 16% growth projection.

Valuation

Based on the current-year estimate, this stocks trades with a P/E multiple of 10.5X, a sizeable discount to the markets 17.5X with the nice next-year projection in tow.

The Chart

As previously mentioned, shares of WDC have been on a big time rally for the four months, recently topping off above $35 and moving into striking distance of the all-time high at $40. Take a look at the chart below.

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