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Shares of Seagate Technology (STX - Free Report) have tanked over the last six months despite solid top and bottom line results. Now, the data storage solution firm’s outlook might prolong STX’s current decline.
Overview
Seagate Technology’s portfolio includes both consumer and enterprise-level data storage products along with data protection and recovery solutions. The Cupertino, California-headquartered company saw its fiscal 2018 revenues pop roughly 4% to reach $11.18 billion. Plus, Seagate’s fiscal first quarter—which it reported in early November—revenue jumped 14% to $2.99 billion.
Stock Price Movement
Despite Seagate’s solid fiscal 2018 and impressive top-line growth last quarter, shares of STX are down roughly 5% in 2018. This falls below the S&P 500’s 1.5% dip, but comes in well above its industry’s 17% decline. Shares of Seagate closed regular trading Monday down slightly to $39.81 per share, which marked a 36% downturn from its 52-week high of $62.70 a share.
With that said, we can see that Seagate stock, on the whole, has performed very well over the last decade. Cleary though, shares of STX have experienced a ton of turbulence over the last five years.
Valuation
Moving on, investors should note that Seagate’s current valuation picture appears relatively solid. STX stock is currently trading at 7.2X forward 12-month Zacks Consensus EPS estimates, which marks a discount compared to its industry’s 10.3X average and the S&P’s 15.7X. Over the last five years, shares of Seagate have traded as high as 15.2X, with a five-year median of 10.2X.
Outlook & Earnings Trends
Moving on from Seagate’s valuation picture, it’s time to see what to expect from the firm’s future earnings and revenues since a good forward P/E doesn’t count for that much if it’s not accompanied by growth.
The company’s current quarterly revenues are projected to fall by 6.2% from the year-ago period to hit $2.73 billion, based on our current Zacks Consensus Estimate. Meanwhile, the company’s full-year revenues are expected to sink by just over 3% to $10.85 billion.
At the bottom end of the income statement, Seagate’s adjusted current-quarter earnings are expected to dip 4.1% to reach $1.42 per share. Meanwhile, the data storage giant’s earnings are projected to plummet nearly 18% in the following quarter and slip 1.3% for the year.
Furthermore, Seagate has only experienced downward earnings estimate revision activity recently, on top of its projected top and bottom-line declines. This means that some analysts are even less optimistic about Seagate’s earnings picture than they were not too long ago.
Bottom Line
Seagate is currently a Zacks Rank #5 (Strong Sell) based, for the most part, on its recent negative earnings estimate revision trends. The data storage company’s current growth outlook does appear to be adversely impacted by its strong fiscal 2018 performance. But that doesn’t help investors.
Therefore, investors still interested in the data storage industry might instead consider Pure Storage, Inc. (PSTG - Free Report) or NetApp, Inc. (NTAP - Free Report) , which are both currently Zacks Rank #2 (Buy) stocks.
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Bear of the Day: Seagate Technology (STX)
Shares of Seagate Technology (STX - Free Report) have tanked over the last six months despite solid top and bottom line results. Now, the data storage solution firm’s outlook might prolong STX’s current decline.
Overview
Seagate Technology’s portfolio includes both consumer and enterprise-level data storage products along with data protection and recovery solutions. The Cupertino, California-headquartered company saw its fiscal 2018 revenues pop roughly 4% to reach $11.18 billion. Plus, Seagate’s fiscal first quarter—which it reported in early November—revenue jumped 14% to $2.99 billion.
Stock Price Movement
Despite Seagate’s solid fiscal 2018 and impressive top-line growth last quarter, shares of STX are down roughly 5% in 2018. This falls below the S&P 500’s 1.5% dip, but comes in well above its industry’s 17% decline. Shares of Seagate closed regular trading Monday down slightly to $39.81 per share, which marked a 36% downturn from its 52-week high of $62.70 a share.
With that said, we can see that Seagate stock, on the whole, has performed very well over the last decade. Cleary though, shares of STX have experienced a ton of turbulence over the last five years.
Valuation
Moving on, investors should note that Seagate’s current valuation picture appears relatively solid. STX stock is currently trading at 7.2X forward 12-month Zacks Consensus EPS estimates, which marks a discount compared to its industry’s 10.3X average and the S&P’s 15.7X. Over the last five years, shares of Seagate have traded as high as 15.2X, with a five-year median of 10.2X.
Outlook & Earnings Trends
Moving on from Seagate’s valuation picture, it’s time to see what to expect from the firm’s future earnings and revenues since a good forward P/E doesn’t count for that much if it’s not accompanied by growth.
The company’s current quarterly revenues are projected to fall by 6.2% from the year-ago period to hit $2.73 billion, based on our current Zacks Consensus Estimate. Meanwhile, the company’s full-year revenues are expected to sink by just over 3% to $10.85 billion.
At the bottom end of the income statement, Seagate’s adjusted current-quarter earnings are expected to dip 4.1% to reach $1.42 per share. Meanwhile, the data storage giant’s earnings are projected to plummet nearly 18% in the following quarter and slip 1.3% for the year.
Furthermore, Seagate has only experienced downward earnings estimate revision activity recently, on top of its projected top and bottom-line declines. This means that some analysts are even less optimistic about Seagate’s earnings picture than they were not too long ago.
Bottom Line
Seagate is currently a Zacks Rank #5 (Strong Sell) based, for the most part, on its recent negative earnings estimate revision trends. The data storage company’s current growth outlook does appear to be adversely impacted by its strong fiscal 2018 performance. But that doesn’t help investors.
Therefore, investors still interested in the data storage industry might instead consider Pure Storage, Inc. (PSTG - Free Report) or NetApp, Inc. (NTAP - Free Report) , which are both currently Zacks Rank #2 (Buy) stocks.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>