We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Seagate will resume share buybacks in current quarter, reflecting strong cash flow and outlook.
Fiscal 2025 revenues rose 39% to $9.1B, fueled by demand from global cloud customers.
Free cash flow hit $425M in Q4, with annual cash flow of $818M supporting shareholder returns.
Seagate Technology Holdings plc (STX - Free Report) announced plans to resume share buybacks in the September quarter, underscoring its confidence in the financial strength and outlook post a strong fiscal 2025 performance.
In fiscal 2025, revenues were $9.1 billion, up 39% year over year, driven by robust nearline demand from cloud customers. A key driver of Seagate’s growth is the ongoing implementation and expansion of its HAMR technology, aimed at increasing areal density and supporting next-generation storage solutions. These technological advances are crucial for meeting the increased demand for high-capacity storage in hyperscale data centers, AI training workloads and decentralized edge environments. Non-GAAP operating profit more than tripled to $2.1 billion in fiscal 2025.
Free cash flow in the fiscal fourth quarter was $425 million, driven by robust top-line growth and disciplined capital expenditures of 3% of revenues, below the long-term target range of 4-6%. Annual free cash flow was $818 million.
STX expects cash generation to expand in the back half of calendar 2025, even with a large variable compensation payout in the current quarter. Further, structural changes and a robust product pipeline are expected to drive higher profitability and cash generation in fiscal 2026.
With profitability trending higher and mass capacity storage demand accelerating, the company appears well-positioned to balance growth with meaningful capital returns, thereby enhancing shareholder value in fiscal 2026 and beyond. In fiscal 2025, the company distributed nearly 75% of free cash flow through dividends, while paying down gross debt of about $150 million in the fiscal fourth quarter.
Taking a Look at Shareholder Returns for STX’s Competitors
Western Digital Corporation (WDC - Free Report) is also gaining from rising demand for high-capacity storage driven by cloud computing and generative AI. Both require massive and cost-effective storage backbones that HDDs still provide. WDC’s revenues skyrocketed 51% year over year to $9.5 billion in fiscal 2025. Free cash flow amounted to $675 million in the fiscal fourth quarter, up 139% while annual free cash flow was $1.4 billion. With strong cash flow, a solid balance sheet and confidence in its business outlook, WDC’s board approved up to $2 billion in share buybacks. In the fiscal fourth quarter, the company repurchased about 2.8 million shares for $149 million. WDC also paid $36 million in cash dividends at 10 cents per share.
Pure Storage (PSTG - Free Report) recently reported second-quarter fiscal 2026 results with revenues growing 13% to $861 million. Growth was broad-based across the portfolio, driven by strong demand from large enterprises, ongoing momentum in FlashBlade, particularly FlashBlade//E, and accelerating adoption of its core software and services offerings, including Evergreen//One, Cloud Block Store and Portworx. Free cash flow was $150.1 million compared with $166.6 million in the year-ago quarter. In the fiscal second quarter, the company returned $42 million to its shareholders by repurchasing 0.8 million shares. Pure Storage has $109 million left under its current authorization plan. PSTG does not pay a dividend.
STX Price Performance, Valuation and Estimates
In the past month, shares have gained 9.6% against with the Zacks Computer Integrated Systems industry’s decline of 3.5%.
Image Source: Zacks Investment Research
In terms of forward price/earnings, STX’s shares are trading at 15.58X, lower than the industry’s 19.97X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for STX’s earnings for fiscal 2026 has been revised up 4.2% to $10.30 over the past 60 days.
Image: Bigstock
Seagate Resumes Buybacks Amid Rising Free Cash Flow Momentum
Key Takeaways
Seagate Technology Holdings plc (STX - Free Report) announced plans to resume share buybacks in the September quarter, underscoring its confidence in the financial strength and outlook post a strong fiscal 2025 performance.
In fiscal 2025, revenues were $9.1 billion, up 39% year over year, driven by robust nearline demand from cloud customers. A key driver of Seagate’s growth is the ongoing implementation and expansion of its HAMR technology, aimed at increasing areal density and supporting next-generation storage solutions. These technological advances are crucial for meeting the increased demand for high-capacity storage in hyperscale data centers, AI training workloads and decentralized edge environments. Non-GAAP operating profit more than tripled to $2.1 billion in fiscal 2025.
Free cash flow in the fiscal fourth quarter was $425 million, driven by robust top-line growth and disciplined capital expenditures of 3% of revenues, below the long-term target range of 4-6%. Annual free cash flow was $818 million.
STX expects cash generation to expand in the back half of calendar 2025, even with a large variable compensation payout in the current quarter. Further, structural changes and a robust product pipeline are expected to drive higher profitability and cash generation in fiscal 2026.
With profitability trending higher and mass capacity storage demand accelerating, the company appears well-positioned to balance growth with meaningful capital returns, thereby enhancing shareholder value in fiscal 2026 and beyond. In fiscal 2025, the company distributed nearly 75% of free cash flow through dividends, while paying down gross debt of about $150 million in the fiscal fourth quarter.
Taking a Look at Shareholder Returns for STX’s Competitors
Western Digital Corporation (WDC - Free Report) is also gaining from rising demand for high-capacity storage driven by cloud computing and generative AI. Both require massive and cost-effective storage backbones that HDDs still provide. WDC’s revenues skyrocketed 51% year over year to $9.5 billion in fiscal 2025. Free cash flow amounted to $675 million in the fiscal fourth quarter, up 139% while annual free cash flow was $1.4 billion. With strong cash flow, a solid balance sheet and confidence in its business outlook, WDC’s board approved up to $2 billion in share buybacks. In the fiscal fourth quarter, the company repurchased about 2.8 million shares for $149 million. WDC also paid $36 million in cash dividends at 10 cents per share.
Pure Storage (PSTG - Free Report) recently reported second-quarter fiscal 2026 results with revenues growing 13% to $861 million. Growth was broad-based across the portfolio, driven by strong demand from large enterprises, ongoing momentum in FlashBlade, particularly FlashBlade//E, and accelerating adoption of its core software and services offerings, including Evergreen//One, Cloud Block Store and Portworx. Free cash flow was $150.1 million compared with $166.6 million in the year-ago quarter. In the fiscal second quarter, the company returned $42 million to its shareholders by repurchasing 0.8 million shares. Pure Storage has $109 million left under its current authorization plan. PSTG does not pay a dividend.
STX Price Performance, Valuation and Estimates
In the past month, shares have gained 9.6% against with the Zacks Computer Integrated Systems industry’s decline of 3.5%.
Image Source: Zacks Investment Research
In terms of forward price/earnings, STX’s shares are trading at 15.58X, lower than the industry’s 19.97X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for STX’s earnings for fiscal 2026 has been revised up 4.2% to $10.30 over the past 60 days.
Image Source: Zacks Investment Research
Currently, Seagate has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.