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Bull of the Day: Western Digital (WDC)

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Headquartered in Irvine, CA, Western Digital Corporation (WDC - Free Report) is a leading provider of storage technologies and solutions. They are one of the largest hard disk drive (HDD) producers in the US and have more than 70,000 employees worldwide. They design, develop, manufacture and market a broad range of HDDs, which are used in numerous consumer electronic devices.

Better-than-expected Results

The data storage company reported adjusted earnings of $2.07 per share, substantially ahead of the Zacks Consensus Estimate of $1.85, and also up 71% year-over-year. Revenues surged 65% year-over-year and also beat our estimate.

Strong demand for hard drive as well as NAND-based products from all categories of customers, resulted in a better-than-expected quarter.

"We reported strong financial performance in the March quarter, enabled by excellent operational execution by our team in a healthy market environment with good demand for all NAND based products, as well as for capacity enterprise and client hard drives," said the CEO.

Rising Estimates

Analysts have been raising the estimates for the company after strong results. Zacks Consensus Estimates for the current and next year have surged to $7.69 per share and $10.58 per share, from $7.03 and $7.87 respectively, 30 days ago. Rising estimates sent the stock back to a Zacks Rank #1 (Strong Buy).



Excellent Industry Outlook

“The world’s most valuable resource is no longer oil, but data,” according to the Economist. Per WDC, stored data is expected to increase four times by 2020. In the current data driven economy, data storage provides the foundational infrastructure. Computer Storage currently has a Zacks Industry Rank of 59 out of 265 (top 22%).


Data storage space has been hot of late, with rising demand among others from cloud and mobility based applications.

The stock could also benefit from a potential deal with Toshiba for their memory chip unit up for sale. Per JP Morgan, the potential deal could boost WDC’s earnings by 30%.

Nikkei Asian Review reported last month that WDC may join with others to make a joint bid for Toshiba’s flash memory unit.

Disclosure: I own shares of Western Digital (WDC - Free Report) in the Income Investor portfolio.

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