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Western Digital (WDC) Gains But Lags Market: What You Should Know

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Western Digital (WDC - Free Report) closed at $39.81 in the latest trading session, marking a +0.05% move from the prior day. This change lagged the S&P 500's 0.45% gain on the day. Meanwhile, the Dow gained 0.51%, and the Nasdaq, a tech-heavy index, added 0.42%.

Coming into today, shares of the maker of hard drives for businesses and personal computers had lost 2.88% in the past month. In that same time, the Computer and Technology sector lost 0.69%, while the S&P 500 lost 1.64%.

WDC will be looking to display strength as it nears its next earnings release, which is expected to be January 24, 2019. The company is expected to report EPS of $1.49, down 62.28% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $4.27 billion, down 20.01% from the year-ago period.

WDC's full-year Zacks Consensus Estimates are calling for earnings of $6.98 per share and revenue of $17.55 billion. These results would represent year-over-year changes of -52.61% and -15.01%, respectively.

Any recent changes to analyst estimates for WDC should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 3.98% lower. WDC is currently sporting a Zacks Rank of #3 (Hold).

In terms of valuation, WDC is currently trading at a Forward P/E ratio of 5.7. For comparison, its industry has an average Forward P/E of 13.38, which means WDC is trading at a discount to the group.

Investors should also note that WDC has a PEG ratio of 0.3 right now. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Computer- Storage Devices industry currently had an average PEG ratio of 0.94 as of yesterday's close.

The Computer- Storage Devices industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 42, putting it in the top 17% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.




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