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What Lies in Store for Western Digital (WDC) in Q2 Earnings?
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Western Digital Corp. (WDC - Free Report) is slated to report second-quarter 2018 earnings results on Jan 25. In the last reported quarter, the company delivered a positive earnings surprise of 7.9%.
Due to expansion in digital data, modest growth of TAM and higher demand for storage, Western Digital’s growth prospects look exciting. Additionally, the company’s expanding product portfolio, secular growth of digital data, growing exposure to the SMB space and positive synergies derived from the SanDisk acquisition are likely to act as catalysts.
Expect What?
The Zacks Consensus Estimate for the quarter is pegged at $3.77 per share, reflecting a year-over-year increase of 63.9%. Further, the Zacks Consensus Estimate for revenues is pegged at $5.29 billion, up roughly 8.1% from the year-ago quarter.
Let’s see how things are shaping up prior to this announcement.
Factors Likely to Influence Q2 Results
Q1 Earnings Highlight
The company reported non-GAAP earnings of $3.56 per share, which beat the Zacks Consensus Estimate by 26 cents. The figure also came ahead of the year-ago quarter figure of $1.54 and the guided range of $3.25-$3.35 per share.
Revenues also increased 9.9% year over year to $5.18 billion and surpassed the Zacks Consensus Estimate of $5.11 billion. The figure was also better than guided.
The year-over-year growth can primarily be attributed to growing demand in the company’s end markets. Management was particularly positive about the company’s flash-based storage segment and joint venture fab operations in Yokkaichi. The ongoing transformation to 3D NAND technology is another tailwind.
For second-quarter fiscal 2018, revenues are anticipated to be within the range of $5.2-$5.3 billion. Management expects non-GAAP earnings to be in the range of $3.60–$3.70 per share. It also noted that the synergy targets from the acquisitions of HGST and SanDisk are on track.
Expanding SSD Market & Cloud Deployment
Western Digital has been expanding into the SSD storage market due to declining sales in the PC market. The emergence of thinner laptops, tablets and demand for fast processing storage devices in the past few years has created an ideal market for SSDs.
Recently, the company unveiled the world’s smallest 1 TB USB flash drive, voice activated media streaming via home devices, and a new series of high performance SSDs. With the increasing need to capture and share rich content, lens technology and video streaming are becoming more and more immersive.
For photographers and drone enthusiasts, the company also released My Passport Wireless SSD and SanDisk Extreme portable SSD. These devices feature a one-touch card copy that enables quick editing as well as third party app integration.
Western Digital also announced My Cloud Home device that showcases new voice-activated media streaming features through smart home devices.
These product additions will enhance the company’s existing product portfolio and aid Western Digital in gaining a strong foothold in the global SSD market, which per latest data by TechNavio is expected to witness CAGR of 17% during 2016-2020.
Anticipating a potential acceleration in cloud deployments, Western Digital is also investing heavily to deliver high-capacity storage devices that will support expansion of cloud infrastructure and cloud applications.
The company has expanded its My Cloud solutions with My Cloud EX4, a broader portfolio of network attached storage (NAS) hard drives. My Cloud EX4 will help the company meet growing business needs with improved flexibility and security, consequently boosting the top line.
The ongoing transformation to 3D NAND technology is another tailwind. Further, the company’s growing footprint in the automotive as well as the connected home and industrial categories are likely to act as a key catalyst.
Acquisitions Driving Growth
Western Digital’s acquisition of SanDisk has aided the company’s growth and also helped it to gain traction in SSD. Additionally, it has allowed the company to step in to the NAND products market which owing to its strong demand, will drive revenues.
Moreover, the company’s acquisition of Amplidata, sTec, Inc., Velobit, Inc. Arkeia Software Solutions and Virident Systems Inc. have not only strengthened its small-to-medium sized business solutions but also expanded its SSD product portfolio.
Western Digital Corporation Price and EPS Surprise
Our proven model conclusively shows that Western Digital is likely to beat earnings estimates this quarter. Per our model, a stock with a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold), has higher chance of beating estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Western Digital currently carries a Zacks Rank #2 and has an ESP of +0.83%.
Some Other Stocks With Favorable Combination
Here are few other stocks which, as per our model, have the right combination of elements to post an earnings beat this quarter:
Caterpillar, Inc. (CAT - Free Report) , with an Earnings ESP of +6.22% and a Zacks Rank of 2.
Western Alliance Bancorporation (WAL - Free Report) , with an Earnings ESP of +0.41% and a Zacks Rank of 2.
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.
Image: Bigstock
What Lies in Store for Western Digital (WDC) in Q2 Earnings?
Western Digital Corp. (WDC - Free Report) is slated to report second-quarter 2018 earnings results on Jan 25. In the last reported quarter, the company delivered a positive earnings surprise of 7.9%.
Due to expansion in digital data, modest growth of TAM and higher demand for storage, Western Digital’s growth prospects look exciting. Additionally, the company’s expanding product portfolio, secular growth of digital data, growing exposure to the SMB space and positive synergies derived from the SanDisk acquisition are likely to act as catalysts.
Expect What?
The Zacks Consensus Estimate for the quarter is pegged at $3.77 per share, reflecting a year-over-year increase of 63.9%. Further, the Zacks Consensus Estimate for revenues is pegged at $5.29 billion, up roughly 8.1% from the year-ago quarter.
Let’s see how things are shaping up prior to this announcement.
Factors Likely to Influence Q2 Results
Q1 Earnings Highlight
The company reported non-GAAP earnings of $3.56 per share, which beat the Zacks Consensus Estimate by 26 cents. The figure also came ahead of the year-ago quarter figure of $1.54 and the guided range of $3.25-$3.35 per share.
Revenues also increased 9.9% year over year to $5.18 billion and surpassed the Zacks Consensus Estimate of $5.11 billion. The figure was also better than guided.
The year-over-year growth can primarily be attributed to growing demand in the company’s end markets. Management was particularly positive about the company’s flash-based storage segment and joint venture fab operations in Yokkaichi. The ongoing transformation to 3D NAND technology is another tailwind.
For second-quarter fiscal 2018, revenues are anticipated to be within the range of $5.2-$5.3 billion. Management expects non-GAAP earnings to be in the range of $3.60–$3.70 per share. It also noted that the synergy targets from the acquisitions of HGST and SanDisk are on track.
Expanding SSD Market & Cloud Deployment
Western Digital has been expanding into the SSD storage market due to declining sales in the PC market. The emergence of thinner laptops, tablets and demand for fast processing storage devices in the past few years has created an ideal market for SSDs.
Recently, the company unveiled the world’s smallest 1 TB USB flash drive, voice activated media streaming via home devices, and a new series of high performance SSDs. With the increasing need to capture and share rich content, lens technology and video streaming are becoming more and more immersive.
For photographers and drone enthusiasts, the company also released My Passport Wireless SSD and SanDisk Extreme portable SSD. These devices feature a one-touch card copy that enables quick editing as well as third party app integration.
Western Digital also announced My Cloud Home device that showcases new voice-activated media streaming features through smart home devices.
These product additions will enhance the company’s existing product portfolio and aid Western Digital in gaining a strong foothold in the global SSD market, which per latest data by TechNavio is expected to witness CAGR of 17% during 2016-2020.
Anticipating a potential acceleration in cloud deployments, Western Digital is also investing heavily to deliver high-capacity storage devices that will support expansion of cloud infrastructure and cloud applications.
The company has expanded its My Cloud solutions with My Cloud EX4, a broader portfolio of network attached storage (NAS) hard drives. My Cloud EX4 will help the company meet growing business needs with improved flexibility and security, consequently boosting the top line.
The ongoing transformation to 3D NAND technology is another tailwind. Further, the company’s growing footprint in the automotive as well as the connected home and industrial categories are likely to act as a key catalyst.
Acquisitions Driving Growth
Western Digital’s acquisition of SanDisk has aided the company’s growth and also helped it to gain traction in SSD. Additionally, it has allowed the company to step in to the NAND products market which owing to its strong demand, will drive revenues.
Moreover, the company’s acquisition of Amplidata, sTec, Inc., Velobit, Inc. Arkeia Software Solutions and Virident Systems Inc. have not only strengthened its small-to-medium sized business solutions but also expanded its SSD product portfolio.
Western Digital Corporation Price and EPS Surprise
Western Digital Corporation Price and EPS Surprise | Western Digital Corporation Quote
What the Zacks Model Unveils?
Our proven model conclusively shows that Western Digital is likely to beat earnings estimates this quarter. Per our model, a stock with a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold), has higher chance of beating estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Western Digital currently carries a Zacks Rank #2 and has an ESP of +0.83%.
Some Other Stocks With Favorable Combination
Here are few other stocks which, as per our model, have the right combination of elements to post an earnings beat this quarter:
Fiat Chrysler Automobiles N.V. , with an Earnings ESP of +18.80% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Caterpillar, Inc. (CAT - Free Report) , with an Earnings ESP of +6.22% and a Zacks Rank of 2.
Western Alliance Bancorporation (WAL - Free Report) , with an Earnings ESP of +0.41% and a Zacks Rank of 2.
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 >>