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It’s no secret that tech stocks have been lighting up Wall Street this year, but most investors will likely attribute this to the explosion of several trendy new growth picks. As a result, strong tech companies with storied histories, such as Western Digital Corporation, might be slipping through the cracks right now.
Founded in 1970, Western Digital has been a leader in computer data storage for decades. The company is one of the largest hard disk drive manufacturers in the world, and its products are used in consumer electronics and datacenters alike.
After a strong earnings beat ushered in a slew of positive estimate revisions, Western Digital is currently a Zacks Rank #1 (Strong Buy).
Latest Earnings Report
In its latest quarter, Western Digital reported earnings of $3.56 per share and revenues of $5.18 billion, beating our respective consensus estimates of $3.30 and $5.12 billion. This earnings result marked year-over-year growth of about 200%, while revenues were up about 9.9%.
This top and bottom line expansion was the result of strong performances in several key business units. Client Devices soared 13%, thanks in part to increased demand for solid state drives, and Client Solutions surged 16% on the back of new products like My Cloud Home.
Looking ahead, management expects revenue in the current quarter to be within the range of $5.2 billion to $5.3 billion. Last year, the company posted revenues of $4.89 billion in the quarter. Furthermore, earnings are expected to be between $3.60 per share and $3.70 per share, up from just $2.30 in the prior-year period.
Estimate Revisions and Key Stats
Earnings estimates are moving higher in the wake of Western Digital’s strong report. In fact, the Zacks Consensus Estimate for the company’s current-quarter earnings has gained 15 cents over the past 30 days. Similarly, our consensus estimates for the full fiscal year and next fiscal year have gained 28 cents and 42 cents, respectively, over that same timeframe.
Furthermore, WDC is currently sporting an “A” grade in each of our Style Scores categories, including the weighted-average VGM category.
The stock’s “A” for Value is supported by its remarkable 6.56 P/E ratio and its better-than-average 1.30 P/S ratio. Furthermore, WDC’s “A” for Growth is lifted by the aforementioned growth rates, as well as its current cash flow growth of 96%. Finally, the company has earned an “A” for Momentum after shares have surged more than 50% in the past year.
Although tech stocks have been dominating Wall Street for a good majority of the year, not every company in the sector has found the same success. Indeed, some stocks, such as ePlus Inc., are struggling to maintain relevancy in today’s ultra-competitive tech environment.
ePlus is a provider of IT services and financing. The company provides a variety of solutions aimed at helping clients optimize their IT infrastructure and supply-chain processes, including services related to cloud computing, security, mobility, and datacenter operation.
After missing revenue estimates by a sizeable amount in its most recent quarter, ePlus has slumped to a Zacks Rank #5 (Strong Sell).
Latest Earnings Results
ePlus reported its fiscal second-quarter earnings results last week. The company posted earnings of $1.27 per share, matching our consensus estimate. However, revenues of $371 million were flat on the year and significantly below our consensus estimate of $414 million.
As a result of these relatively weak results, shares of ePlus plummeted more than 20% in the direct aftermath of its report. Since then, the stock has struggled to generate positive momentum, likely because of weakened analyst sentiment.
Estimate Revisions and Key Stats
Since its recent report, we have seen slumping earnings estimates for ePlus. In fact, the Zacks Consensus Estimate for the company’s current-quarter earnings has slipped three cents over the past week. Furthermore, our consensus estimate for the company’s upcoming fiscal year has shed a penny over that same timeframe.
Additionally, investors might worry about a few other key metrics. For one, ePlus is generating cash flow growth of just 2.7% right now, which is significantly lower than its 14.4% historical average. The company is also operating with a net margin of 3.9%, making it slightly less efficient that its industry’s average net margin of 4.3%.
Additional content:
Can Disney Escape Hollywood Woes in Q4?
Most big-name brands have already reported earnings this quarter, and therefore, a slew of investors now look longingly to the fourth quarter and the full fiscal year. Nevertheless, industry shakers such as the Walt Disney Company have yet to post their most recent quarterly results.
Recently, Disney has felt the pressure from competitors. Streaming companies like Amazon and Netflix have altered the way people consume entertainment forever. This, in turn, has cut into Disney’s revenues and profits.
Therefore, Disney, like many other traditional entertainment companies, must grapple with how to grow—and perhaps pivot—in the midst of a swiftly changing media climate.
On top of that, streaming has forced Disney to try to adapt its linear TV model as cord-cutters trample its once-untouchable sport entertainment juggernaut, ESPN, at a pace few could have seen coming. And along with its impact on Disney’s television unit, streaming has helped contribute to declining box office sales.
Many Disney investors have dumped the stock based on these relatively severe headwinds, which has caused its shares to recede nearly 3% this year.
Still, based on our latest Zacks Consensus Estimates, Disney’s revenues are expected to inch up 0.05% in the soon-to-be reported quarter. On top of these top line projections, the company’s fourth-quarter earnings are expected to climb 1.82%.
However, investors will want to venture beyond earnings and revenue expectations in order to try to assess how Disney’s individual business units are projected to perform in its Q4.
This is where our exclusive non-financial metrics consensus estimate file can prove vital. These key stock-driving estimates are updated daily and are based on the independent research of expert stock analysts. For more information on the NFM file, click here.
Disney’s now world famous Parks and Resorts unit is expected to pop in the fourth quarter, but operating income in its Media Networks unit is projected to drop. This where investors would love to see Disney’s Hollywood-based revenues surge.
However, Disney’s Studio Entertainment unit is also projected to experience a substantial decline, proving that the company could not overcome the nearly industry-wide box office struggles.
According to our latest NFM consensus estimates, Disney’s Studio Entertainment revenues are expected to plummet 9.61% year-over-year to fall to $1.811 billion.
Hopefully for investors, the force will be with Disney in its first quarter of fiscal 2018 when it releases one of the most highly anticipated and hyped films of the year, Star Wars: The Last Jedi.
And make sure to check back here for our full analysis of Disney’s actual results later this week!
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius. Click for details >>
Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Western Digital, ePlus, Walt Disney, Amazon and Netflix highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – November 9, 2017 – Zacks Equity Research highlights Western Digital Corporation (WDC - Free Report) as the Bull of the Day and ePlus Inc. (PLUS - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Walt Disney Company (DIS - Free Report) , Amazon (AMZN - Free Report) and Netflix (NFLX - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
It’s no secret that tech stocks have been lighting up Wall Street this year, but most investors will likely attribute this to the explosion of several trendy new growth picks. As a result, strong tech companies with storied histories, such as Western Digital Corporation, might be slipping through the cracks right now.
Founded in 1970, Western Digital has been a leader in computer data storage for decades. The company is one of the largest hard disk drive manufacturers in the world, and its products are used in consumer electronics and datacenters alike.
After a strong earnings beat ushered in a slew of positive estimate revisions, Western Digital is currently a Zacks Rank #1 (Strong Buy).
Latest Earnings Report
In its latest quarter, Western Digital reported earnings of $3.56 per share and revenues of $5.18 billion, beating our respective consensus estimates of $3.30 and $5.12 billion. This earnings result marked year-over-year growth of about 200%, while revenues were up about 9.9%.
This top and bottom line expansion was the result of strong performances in several key business units. Client Devices soared 13%, thanks in part to increased demand for solid state drives, and Client Solutions surged 16% on the back of new products like My Cloud Home.
Looking ahead, management expects revenue in the current quarter to be within the range of $5.2 billion to $5.3 billion. Last year, the company posted revenues of $4.89 billion in the quarter. Furthermore, earnings are expected to be between $3.60 per share and $3.70 per share, up from just $2.30 in the prior-year period.
Estimate Revisions and Key Stats
Earnings estimates are moving higher in the wake of Western Digital’s strong report. In fact, the Zacks Consensus Estimate for the company’s current-quarter earnings has gained 15 cents over the past 30 days. Similarly, our consensus estimates for the full fiscal year and next fiscal year have gained 28 cents and 42 cents, respectively, over that same timeframe.
Furthermore, WDC is currently sporting an “A” grade in each of our Style Scores categories, including the weighted-average VGM category.
The stock’s “A” for Value is supported by its remarkable 6.56 P/E ratio and its better-than-average 1.30 P/S ratio. Furthermore, WDC’s “A” for Growth is lifted by the aforementioned growth rates, as well as its current cash flow growth of 96%. Finally, the company has earned an “A” for Momentum after shares have surged more than 50% in the past year.
Bear of the Day:
Although tech stocks have been dominating Wall Street for a good majority of the year, not every company in the sector has found the same success. Indeed, some stocks, such as ePlus Inc., are struggling to maintain relevancy in today’s ultra-competitive tech environment.
ePlus is a provider of IT services and financing. The company provides a variety of solutions aimed at helping clients optimize their IT infrastructure and supply-chain processes, including services related to cloud computing, security, mobility, and datacenter operation.
After missing revenue estimates by a sizeable amount in its most recent quarter, ePlus has slumped to a Zacks Rank #5 (Strong Sell).
Latest Earnings Results
ePlus reported its fiscal second-quarter earnings results last week. The company posted earnings of $1.27 per share, matching our consensus estimate. However, revenues of $371 million were flat on the year and significantly below our consensus estimate of $414 million.
As a result of these relatively weak results, shares of ePlus plummeted more than 20% in the direct aftermath of its report. Since then, the stock has struggled to generate positive momentum, likely because of weakened analyst sentiment.
Estimate Revisions and Key Stats
Since its recent report, we have seen slumping earnings estimates for ePlus. In fact, the Zacks Consensus Estimate for the company’s current-quarter earnings has slipped three cents over the past week. Furthermore, our consensus estimate for the company’s upcoming fiscal year has shed a penny over that same timeframe.
Additionally, investors might worry about a few other key metrics. For one, ePlus is generating cash flow growth of just 2.7% right now, which is significantly lower than its 14.4% historical average. The company is also operating with a net margin of 3.9%, making it slightly less efficient that its industry’s average net margin of 4.3%.
Additional content:
Can Disney Escape Hollywood Woes in Q4?
Most big-name brands have already reported earnings this quarter, and therefore, a slew of investors now look longingly to the fourth quarter and the full fiscal year. Nevertheless, industry shakers such as the Walt Disney Company have yet to post their most recent quarterly results.
Recently, Disney has felt the pressure from competitors. Streaming companies like Amazon and Netflix have altered the way people consume entertainment forever. This, in turn, has cut into Disney’s revenues and profits.
Therefore, Disney, like many other traditional entertainment companies, must grapple with how to grow—and perhaps pivot—in the midst of a swiftly changing media climate.
On top of that, streaming has forced Disney to try to adapt its linear TV model as cord-cutters trample its once-untouchable sport entertainment juggernaut, ESPN, at a pace few could have seen coming. And along with its impact on Disney’s television unit, streaming has helped contribute to declining box office sales.
Many Disney investors have dumped the stock based on these relatively severe headwinds, which has caused its shares to recede nearly 3% this year.
Still, based on our latest Zacks Consensus Estimates, Disney’s revenues are expected to inch up 0.05% in the soon-to-be reported quarter. On top of these top line projections, the company’s fourth-quarter earnings are expected to climb 1.82%.
However, investors will want to venture beyond earnings and revenue expectations in order to try to assess how Disney’s individual business units are projected to perform in its Q4.
This is where our exclusive non-financial metrics consensus estimate file can prove vital. These key stock-driving estimates are updated daily and are based on the independent research of expert stock analysts. For more information on the NFM file, click here.
Disney’s now world famous Parks and Resorts unit is expected to pop in the fourth quarter, but operating income in its Media Networks unit is projected to drop. This where investors would love to see Disney’s Hollywood-based revenues surge.
However, Disney’s Studio Entertainment unit is also projected to experience a substantial decline, proving that the company could not overcome the nearly industry-wide box office struggles.
According to our latest NFM consensus estimates, Disney’s Studio Entertainment revenues are expected to plummet 9.61% year-over-year to fall to $1.811 billion.
Hopefully for investors, the force will be with Disney in its first quarter of fiscal 2018 when it releases one of the most highly anticipated and hyped films of the year, Star Wars: The Last Jedi.
For more stock-moving estimates ahead of Disney’s Q4 report, check out our full guide: What To Expect From Disney's Q4 Earnings Report.
And make sure to check back here for our full analysis of Disney’s actual results later this week!
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius. Click for details >>
Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think. See This Ticker Free >>
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Media Contact
Zacks Investment Research
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performancefor information about the performance numbers displayed in this press release.